The homes we build -
3 homes we are building for others in the pay as you go process (they own the land). 2 homes we are building on contract where we get paid at the end after a level of collaboration between builder and client (I own the land). And 8 homes being built on spec - meaning, on my dime, with no buyer lined up yet. It’s a pretty good mix, made all the better (meaning low risk) since I’m able to now self-finance these spec homes - since let’s be honest, 10% commercial lending rates would eat up your profits pretty quick, and eat up your cash flow even quicker.
We are building in Olivebridge (4 currently), Narrowsburg (5 currently), North Branch (1), Forestburgh (2), Copake (1).
We have 2 homes finished that will sell next week, and we have another client-owned that will finish up here in a week or two.
Fun sponsored Native magazine article written by my friend Brian Mahoney - Navigating Uncertainty.
Motoring right along, a little too fast for our administrative infrastructure at the moment, but since I built this machine from the ground up, I can stress its parts and know when to throttle up and throttle down, taking it into the red rpm’s and easing out of them. There are a lot of small business who know their business like I do, and then there are a lot who don’t, who have delegated important facets of the business to a new employee and have little idea of what they are doing (mostly in book-keeping). Dangerous. For me, as I spend Saturday morning reviewing profit/loss statements, balances sheets, basis statements, I can spot an errant number or entry without even much effort, just cause it doesn’t make sense at the moment - I make a note, we dig into it the next week, and wallah, most times we find a minor book-keeping mistake where a number is wrong, in the wrong place, etc…
It’s being written about a lot, but I’m starting to feel it first hand, and that is the aging out of the construction professional. A lot of my partners - my cleaner, my kitchen designer, cabinet installer, plumber etc… right on down the line, are getting older. Christ, I’ve been at this 20 years, so partners that were 45 when I got started are mid-60’s. Health issues, slowing down, tech issues, etc… Cancer, knee issues, shoulder issues, you name it. It’s a concern. And there is a deficiency of people coming into the industry - a very well-paid industry, with no need for crippling college debt, will absolutely pay you on the job while you train. Where this leads us - this deficiency of building industry employees - I’m not sure, but it’s not good, since home building and construction is a fundamental part of our economy.
It’s weird, coming from a lower middle class background (and that actually might be an exaggeration) to see some stat the other day - some random figure about retirement savings, or net worth, or something, and see I now fall in the .1% of some of these segments. Not 1%. But .1%. Fascinating since just 16 years ago I would have been in the .1% of people most likely to go bankrupt that week and not have a pot to piss in and half to start over at at age 36 with not a whole lot tangible to show for it.
Somebody's very real first world problem, with the boot on the car - interestingly, the arrogance of the parking was eye-opening, it was clearly NOT a parking spot-
Another thing that is fascinating are all the high-net worth individuals I work with - I don’t mean the clients - I mean the tradesmen. The bluejeans and pickup set - the 12 hour a day, 6 days a week for decades set. The all weather set. The got a problem I got a solution, a lot of times using big machines set. The millionaire next door set. The started from scratch set. The weathered the hard times and kept at it set. The can’t keep them down set. The type that built America set. It’s a privilege and honor to lead this set of hard-working Americans, each day.
You hear a lot about AI taking over the world, but I’m just having a hard time squaring that imminent threat with my phones voice text unable to decipher the most basic patterns of my speech, or pick up on industry jargon, to make basic corrections. Literally the stupidest app in terms of understanding learning - clearly the texting apps (what’s app, facebook, apple text) are not using AI for improving text corrections. I can change the same thing 100 times in a text - say one of our jobs is named A4 - and still the the app can never realized that A4 is not ‘a for’ - happens over and over. Seems like there is a disconnect if AI is so powerful.
The debate over the value of homeownership rages. Owning a home isn’t cheap. And it’s return on investment when you add up the taxes, maintenance, improvement, mortgage interest is not real great. I think what it does however, is force a person to make a monthly and irrevocable contribution to a long term asset, so while the raw appreciation of value may be debatable, the pot of equity/money after 10, 20, 30 years is real. But all in all, as a wealth building tool, it’s not that great, except that otherwise, people would piss away and spend instead of contributing to paying off a large sustainable asset.
High School football season has started, and my QB 9 grader has a passion for the game. I like that he has the talent for the QB spot - he's not a multi-sport gifted athlete, but he has always had a knack for throwing the pigskin, and loves the game. I like that he chose the toughest position on the field - he will have lots of failure, and there is nothing better for anyone than failing - big or small - failure is the key to life, since its where all the lessons come from that you can't shake off real quick. It's where the strength comes from. Most failure you have to work out on your own - no words or condolences really help that much. I still fail 5x a week at something or another - failures a good friend, who keeps me honest, keeps me focused and keeps me from thinking I know too much, which is the most dangerous thing ever in business.
I constantly remind myself that for most part I'm an alien creature to most people around me - I'm very comfortable with life-altering risk and uncertainty inhabiting every corner of my life, and I've experienced failure on a grand and constant basis for 20 years. Walking around with that type of 'life lens' creates a life perspective that is hard to relate to if limiting risk and failure is your main track in life, which for better and worse, is most of us.
Houses under construction
Boy, time flies when you are aren't blogging, creating an unacceptable span between posts -
Might as well do a blog about my houses, right? And not just stream of consciousness of random thoughts. Though there is no lacking in random thoughts- just this week I had an encounter with a Jennifer Ward of Indendence Missouri through an online digital freelance portal that connects “talent” with “businesses”. I’ve had some good luck with it, a few relationship forged there are 5+ years. This one with Jenn definitely won’t be of them. I really can’t quite figure it out - she was hired to do some MLS data entry work, didn’t do any of it, then freaked out when she wasn’t paid in full, having a full blown tantrum on social media review sites. Whatever, but I’m not sure why she thought you get paid for not living up to your word. And if she would have spent half the creative energy on the work she was hired for as she did in her subsequent attacks on us, she would've been considered a talented individual. It's always the smallest amounts that seem to have the biggest rage attached to them -a little counterintuitive.
It’s always a head scratcher when we we get attacked like this - let lie (lay?), attack back, settle, rally the troops. Each case is individual, but what is definitely true that if someone gets too aggressive and nasty, I only have one mode and that’s to hit back with the bigger club. The problem with hitting back too hard is I end up feeling bad for these people since they really don’t know what they are starting, and rarely are they prepared for a pushback. Actually, the worst part was looking her up on the internet and finding out more about this person acting like a lunatic and then getting aggressively spammed by the 'people finder' websites repeatedly forever.
We got a ton of houses going -
Micro Cottage 6, in Narrowsburg. For Sale.
A 500 sq ft studio house in Narrowsburg. For Sale.
A 10 acre complex with house, garage, covered cabana and pool. Part fields, part woods, and a big view. Up at da Crest. For Sale.
Farm 74 at Ashokan Acres in Olivebridge, for sale.
A new Ranch in Narrowsburg, for sale.
A Ranch in Narrowsburg that will sell in a week or two.
A 2300 sq ft Barn home in Olivebridge on Lot 3. For sale.
Lulu checking out Ranch 62 in Narrowsburg.
And the house we are building in Copake, Columbia County.
And that doesn't include the Wanger house, and 7 lots we are clearing and installing driveways. Lots of progression. Lots of cash coming and going.
Credit Scores
A busy week. Lots of driving. I put 35k miles minimum a year. I can spend 5 hours a day in a car more than once a week. Driving 90 minutes doesn’t even register. I’m amazed at the people who don’t have to do that. I listen to a lot of Dave Ramsey lately, podcasts. I agree and disagree with him in equal measures but I enjoy their perspectives. And now that Dave is trying to scale back, there is this Hunger Games type of thing happening on air as talent jockeys for a place at the Ramsey network broadcasting table. You can feel the tension in the air as these people try and find a place.
I don’t really agree with him that debt is bad and should be avoided. I do agree it’s dangerous, and you should never be cavalier about it, and since a lot of people aren't great with understanding basic finance, personal or business, yeah, it can get burdensome quickly. He dumbs down a lot of stuff past the point of reality - like, I’m not building a home building business to this size, with my business model, without a ton of debt (thank you Jeff Bank). But, within a few years of starting up, my debt was project based, per house based, and not operations based. Big difference. I did the Ramsey thing like 10 times. Load up on debt, and focus like the devil to pay it off.
I never realized, though it makes perfect sense, how dumb financially it is to buy a new car unless you have substantial net worth, especially now that cars cost $50k and people are financing them over 6-8 years (that’s crazy) and having $700 a month payments (that’s crazy). Anything with a motor he says is depreciating, and is the inverse of wealth building. Makes sense. Hard to make sense of a purchase that after 3 years is worth half of what you paid for it while you still owe 75% of what you paid for it. Keep doing that your whole life and it adds up to a lot more than that other wealth destroyer - Starbucks Coffee.
He’s also on the forefront like no one else I know of the student loan catastrophe for millions of families, and doesn’t hold back on the nonsensical nature of taking out $120k in loans for jobs that pay $60k.
I have to admit being guilty of this, and to be honest I’m about ashamed by it, of looking ‘down’ at people who don’t choose college as their route. I noticed it a ways back, when I was introducing some people and their husbands are young and successful in their own young way, but I skipped over them when introducing the dinner guests and what they did - granted, the dinner guests had 20 years and a lot of professional skill and experience behind them, but in the back of my mind, their careers were 2nd tier.
Which is really bad, coming from me, since I deal with everyday talent extremely hardworking millionaires every day of my life who have never been to college - my masons, framers, plumbers, well drillers, hvac people, etc… Literally have no use for a pointless college degree.
And some tiktoks hit it home for me - instead of wasting 4 years, coming out with a degree of debatable worth, and typically a lot of debt, only to hope for a job that will pay you $60k start and then a struggle to move up as your colleagues vie for the same openings - instead, you start working at 18, you get paid as you train half the time, you are in industries that pay well, and at 24, 25, 28 you can be making 6 figures, and have your choice of jobs. Getting away from college-is-for-everyone is critical to America’s future - college is too expensive, and of debatable worth for a lot of people. Even though I’m saying this, the idea that trades are a good route is a no-brainer, but would I be happy if my daughter (if I had one) brought home a successful car mechanic or plumber or Hvac professional? I know I wouldn’t, and that’s on me.
But, lets be honest too - education, learned wisely and affordably, opens ones mind and creates a web of curiosity, compassion and understanding that going to work at 18 with a bunch of high school grads isn’t going to provide, be it about religion, gender roles, aspirations for your children, etc… So, like most things as an adult - it’s complicated.
But the point of today’s blog is none of the above - although that’s not true, it’s a Ramsey rant offshoot. But first, my day -
Got up, dressed for my road bike, biked 10 miles down and 10 miles back on Rt 206 between Milford and Stroudburg along the Delaware Water Gap - 20 miles in 1 hr 30 minutes, then napped, then read a book which I’m loving and now blogging. Then pool. Tomorrow we have the big event at Ashokan Acres.
Credit Scores - there is literally not a person who should have their credit score pinned at the highest possible level other than me- I’ve used debt responsibly for 25 years. Literally hundreds of millions of dollars borrowed and paid back, on time, ahead of time, in full. Car loans, truck loans, house loans, business loans, personal loans, credit cards galore. Never late, never carry a balance on a credit card, pay shit off and pay it off fast. The fICO companies literally have thousands of months of credit card history to see exactly what I do - run em up, and pay em off, the same month.
And yet, depending on the credit agency, I can see my credit score dip in the 600’s if I happen to pay my $125k lumber bill with a credit card, or borrow $100k for a new truck. It doesn’t matter that there is $400k in cash, no mortgages, big fat balances sheets with no liabilities, gigantic earned income - all they see (or want to see) is “OMG you are using 55% of your available balance on one of your cards” - never mind that that amount x50 is sitting in a bank account.
The only reason I can see that credit companies want to use this infantile way to evaluate risk, this one size fits all regardless of your net worth or yearly earned income, is because it helps keeps rates elevated for a large pool of borrowers who should be at the top level of FICO score. I mean, if I’ve been using 5 credit cards for 20 years, heavily, - like 1200 months of on time payments, each and every month before interest kicks in, but I’m being put into the same formula as the guy with a mortgage, 3 kids, nothing in the bank, a car loan and a $100k household income, -of course I’m getting screwed when I go to borrow - so for this wealthy or somewhat wealthy slice of people who literally have zero chance of defaulting on anything struggling to keep a 700 or 800 score, it’s just a scam. And I guess like everything else in America, it’s a scam to fleece the consumer, with collusion among rating agencies, banks, gov’t etc…, baked so deeply into the fabric of our life we don’t even notice it. It's like measuring the danger of driving a race car without examining the experience of the driver, or evaluating the probability of hitting a major league fastball without taking into account the skill of the hitter, or in my case, judging the likelihood of attracting the female favor without knowing the extent of my game.
Or maybe we do notice it - and that explains the resilient attraction to a burn it all down candidate like Don Trump.
I mean, it should be pretty simple, and transparent - have liquid assets that are 3x your debt exposure and a predetermined length of unblemished payments, and you get a perfect credit rating. It could be anything, but it should transparent, it should be objective, it should be rooted in the size of your shovel (income) as well as the size your hole (debt). Without the income side, without the asset size, credit scores are a complete scam and an American way of life, to the detriment of the average American. With that, I’m with Ramsey all the way.
General Musings
Electric is out, near and far here in Milford PA since last night when some storms blew through. Something serious happened cause it’s out for like 5 miles in all PA directions. That’s unusual. Lucas and his friend Cameron spent the day without Tech which I think was eye opening for them as they built stuff, hit stuff, explored stuff, lifted stuff, crushed stuff, etc…
Lots of seasons starting up - pool season, lavender and black eyed Susans season, garden season, and even HS football season is kicking back into gear with nightly strength training and drills. I’ve harvest lettuce from my 1st year garden this year, and soon tomatoes, cauliflower, corn, mint and basil. The bumblebees are right on the heels of the lavender blooming.
I have solar here, and I also have a stack of 5 batteries, so in essence I have a working generator which is a pretty cool way to live off grid. As long we get a little sun here and there, I’m literally off the grid here in the burbs, spinning the meter backwards.
As I have noted, less blogging means less stress at work, having to work things out through the process of writing and thinking it out. Still a ton going on and going wrong and going right, but it feels like we’ve exited the true transition phase and now are pretty close to figuring out how the company will best operate going forward. What is true is that it will operate better.
I don’t know why I’m always being tested, but I don’t know of another company that has as many black swan instances of employee or employee-family illnesses that rock the boat like we’ve experienced over the last 3 years. For a company that is heavily dependent on our employees, and each one that sticks around is filling some vital role, we’ve had 3 or 4 employees that had no intention of going any where else for employee, be impacted by a health incident that caused them to quit our employ. Really strange and odd and it really pisses me off - since it’s just black swan wholly unpredictable, highly unlikely events, that set us back and make us scramble. Just this week we had our part time book-keeper helper have an emergency appendix operation and we haven’t heard from him since. It gets old, and feels unwarranted and undeserved.
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A trip to Kansas City got me thinking. Interesting city, really nearly dead center in the USA. As far (or as close) from the East as to the West. While I was away on this 36 hr jaunt, it seems the Hudson Valley got crushed with a pretty significant flooding event with lots of roads, train tracks, and bridged impacted. Hoping NOT for chaos on my way home from the airport this morning - (this was cut and pasted from last Monday and all went well, at for me).
In terms of KC, and maybe this is true for most of the US, it’s just not the pressure cooker of the coasts, not the rushedy rush rush, not the pushing and shoving. There’s something really to be said about the cost of living.
We got a ton going on, but it’s different than it was. It’s mostly ‘for hire’ work - either our homes on your land or custom designs brought to us - or spec homes. That’s different because in the past we would also have quite a few homes that have buyers signed up for, that we are building, that they will buy at the end - customizing and personalizing as we go along. This last one has always been our bread and butter, but takes a lot of office skills and time that we scaled back on. So we will see how the spec homes sell, and we’ve sort of pivoted a little and are better defining what is and what is not on the table in terms of personalization.
Our Ashokan Acres project is taking off. Roads in, 3 or 4 building permits. Driveways in. Building lots cleared. Open house/Land tours scheduled for the 23rd.
The Student Loan thing to me continues to amaze. I kept hearing about these people who would pay year after year and end up with more of a balance then when they started and I didn't see how that was possible, being a digging out of debt veteran myself. Turns out, they opted into a payment plan based on a math formula of their cost of living, income-based, so they ended up paying less than the interest each month, or the same as the interest or just a little more - so DUH, if you aren't touching the principle, how would your debt go down? Financial illiteracy is just so dangerous. But the idea that such an option is even possible is crazy. And now there has been a pause FOR 3 YEARS. I just want to get this straight - the gov't offers loans and supports private loans to young, unqualified buyers far in access of what they will conceivably be able to pay based on a ton of data. Make these loans non-forgivable and non-bankruptable. Offer no limit to what you can borrow and what you can use it for. When you get out of school, and can't pay back, offer payment plans that actually increase the size of the loan. Bemoan the problem while making more loans everyday. Get colleges and high schools in our the scheme, characterizing people who don't go to college as 2nd tier.
I used debt heavily to get my life rolling. I bought my first house in Sullivan County in 2002 with a credit card check that came in the mail. By 2004 I was really swimming in the dark waters of debt. But as soon as I had a dollar i started paying it down, aggressively. and continued to do so. Rack it up, pay it down, rinse and repeat. And eventually my shovel (my income) outpaced my debt (hole) and the habit of paying it down gained steam and turned the corner. But as the Dave Ramsey critic says, college in my day cost $6k, came out of school with $10k of debt, loans weren't offered to pay for 4 years of elevated lifestyle - so that was a plus, though, I think I would have plowed through it anyways. Insane, and it will be interesting to see how it plays out as the Biden administration pulls out every trick in the book to continue to delay repayment, I think the latest being no default of credit blemish for the first 12 months after repayment kicks in - Hello Joe, it's just delaying the inevitable pain for these folks.
Been taking Lucas my son along with me. He got his first paycheck the other day. We got him a bank account, a brokerage account, a retirement account, a quick books account, he's been snapping some drone shots, going to work with me, going through the 7 stages of grieving each morning on the way to work but all in all, going pretty well. I think it's good for him to see what I've doing everyday for 20 years in order to make his life and lifestyle possible. He's old enough now to at least on some level observe and appreciate the effort I'm making, and have been making.
and finally, take that GOLDSTEIN!!
