Catskills - Sullivan County - Ulster County Real Estate -- Catskill Farms Journal

Back by popular demand, a blog post. My friend and colleague Eric G from G5 Insurance reminded me that a new post was due, and I aim to please, so here it is. On a Saturday morning. Who knows where it will go since it is not preplanned. Last night, on the golf course, it was getting darker by 7:30, a sure indicator of the change of seasons, ready or not.

Probably best to get the house horseshit out of the way, so I'm not left tying it all together in the end. This beauty is actually for sale. Rare indeed. Up in the Crest, just north of Fremont NY. Big pieces of land, and big views, and a great assortment of homes. I ended up with that land when the original developer, after 14 years, gave up, and we took over (purchased) at a price that gave me lots of room to maneuver. The home below, just weeks from being finished, will cost around $700k. Has mountain views and a looks over a lake, and gets a lot of sun all day long.

Just returned from a 10 day trip in the '72 Malibu with the dog - Milford, Valley Forge, Spotsylvania, Nags Head, Surf City, Raleigh, Winchester and then back home to Milford. I had never been to the Carolina coast, and it was well worth the journey. From Corolla, across with the help 2 ferries from Hatteras and Ocracoke. I've never spent a ton of time in beach towns, and they all seem to share a lot of commonality, dive bars and fried food being 2 of them. Discovered my dog is not comfortable on the beach - everytime I left her off leash, she would run as fast as she could (and that is really fast) through the dunes and off to who knows where. Thought I lost her on the first flight, had written her off, but then found her on the beach 10 minutes later.

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I had never been to the southern low country, and it certainly is pretty and certainly has a unique feel to it.

The big college debt relief was all in the news this week.  I have 2 thoughts - $10k is really much to move the needle on a lot of the debt loads, and 2, there was a lot of great articles delving into who owes what, split out by age, region, ethnicity - so that was interesting. The whole college expense and loan issue is a real shame - the idea that 18-22 year olds, who for many have never had any experience with debt and little experience with money - that they can borrow $100k, to be paid back in the future with no current obligations, and you can borrow more than the college costs and use it to live, and you can't get out of it with bankruptcy- that's not really on kids - that's a rigged game, preying on our children. It starts in HS with school administration bragging about what schools their students get into, with guidance counselors who recommend the 'best' schools, to society at large that puts a premium on the brand of the school, and the 'life changing' network of people you could meet.

There are all sorts of ways to fix this problem - loans could be tied to the profession and salary of the chosen major (no $300k loans for teachers), schools could be held accountable for better due diligence by allowing loans to be extinguished thru bankruptcy (this would certainly cause a decrease in the cost of schools), etc.... Giving out $10k but not fixing the problem and continuing to allow this predatory behavior towards our children is not the best path forward. Maybe a start though... I mean when I went to school, University of Pittsburgh cost less than $6k a semester. If I was burdened by gigantic student loans, my entire life would be different - my fixed costs of payback would have eliminated all of my choices - choices that have resulted in an effort that by now has injected $300m of economic stimulus into the regions where I work - all that would have been impossible since the monthly payback nut would have strangled any entrepreneurial (and money borrowing) ideas. My journey has been such a high-wire act that carrying the burden of a big loan would been the breeze that blew me off course. And I was an English major, an area of focus I give a lot of credit to for teaching me how to evaluate information, and condense it into effective messaging.

Interesting times out there in the real world - information about stock market, wars, energy crisises, inflation, housing market - is hard to decipher. Just glad I'm not fully leveraged, and that we cycled through a very profitable investment cycle - where we load up on land and houses and then sell them off before loading up again (typically accompanied by a fair amount of working debt from Jeff Bank) - this time, I seem to be really well positioned, with a ton of dry powder, a years worth of sales queued up, several homes being built and paid for as we build them (which alleviates a lot of cash flow stress), a lot of passive income, and a team that is without parallel. And even a home that is solar powered with a battery so I'm sort of almost off grid - Come what may, the perch from which I write seems to be a perch of safety, come what may.

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I’ve always borrowed a lot of money.  Real estate is a leverage game, and hence why nearly all real estate players go bust at least once, get caught overexposed when the market turns against them, and get caught in a position where they can’t pay the bank - and you always have to pay the bank.  Jeff Bank’s lawyer said it simply enough - ‘keep paying us back and we will keep lending you money.’   Don’t pay them back and then all those documents-signed pages of the loan agreement quickly become referenced and quoted.  “Oh, you didn’t know that absolutely everything you own is pledged here, sorry, should have read the fine print.’

You can get caught behind the 8 ball in lots of ways.  Market downturn, interest rate hike, change in consumer habits, regulatory delay, lawsuit over something.  And then you just bleed and bleed and bleed, the money costs to the back, the carrying costs of interest and insurance, and legal, etc… can very quickly accelerate your basis past the projections and make making money through the project difficult.

I happen presently to be in my least leveraged position ever, and when I look back at some the leverage ratios I had in the past I can only shake my head at the naivety that made me think I could ever burrow my way out of some of those debt loads - but that’s a story for another day.  Today’s story/anecdote is about the increase in interest rates making my personal decisions easier - since at 7% borrowing costs from the bank, I can take any excess cash the business is throwing off and loan it back to the business, saving (or making) 7%, which is a good rate of return.

When rates are at 3 or 4% it seems worthwhile to pay the bank and look for alternative investments - be it stocks, or real estate or whatever - to earn more.  Honestly, I stopped doing that for the most part, I’ve pivoted to paying as little interest on anything as much as possible, be it cars, personal real estate, company working debt - it just all ads up, and the payment is a sure thing, whereas trying to pay interest and invest the money you could have used to pay down debt to invest in search of higher returns is not a sure thing.  It just really adds up.

I like debt.  Manage debt well.  Believe growth is made possible and juiced with borrowed money.  But for me, right now, I’m just playing it safe.  If these rates would have doubled last year around September, I literally would have owed $15-20k a month more, and that’s serious money.

I’m sure there are lots of people with lots of borrowed money feeling the pinch.  Maybe my dry powder will come in handy over the next couple of years.  My guess is it will.

Like I said 2 weeks ago, all this recession talk is bullshit.  528,000 new jobs. It’s a media creation.  Yes, higher interest rates will slow down economic growth and will slow down housing - but that’s a good thing - the housing market was insane and not healthy.  I work with literally 40 small businesses a week, and watch another 40.  They are busy, they are hiring, and the pipeline of work stuffed with opportunity.  If an economy is growing at 6% and now it’s growing at a rate that would have been considered great just a few years ago, - say 4% - but the decrease from 6% to 4% is a decline of a certain percentage that marks a recession - that’s just playing with numbers, not a real thing.  Anyone out there in the ring can see how strong the economy is, especially regionally.

As I said above, I work, and have worked with small businesses for years.  I hire, fire, coach, mentor, teach, and collaborate with a wide range of them, so I’m involved and get to see close up how they do their book-keeping, scheduling, employee management, quality control, etc…. A million little details of how they interact with us, and since we spend about $1.5m a month in paying small businesses, my perch from which I observe is well positioned.

And what is true, without a doubt, is the best small businesses never stop fiddlin’ around with their operations - trying this, trying that, reaching success with one trial balloon, and then trying another.  There are so many operational details of a small business that you can noodle and fiddle endlessly - with insurance, truck fleets, employee incentives, banks, software, legal, accounting, scheduling etc…. And a small business can actually impact operations pretty quickly with well-implemented pivots, as opposed to larger ones where the ship is harder to turn.

So fiddle away my small business friends.  Beside the cojenes to actually be in the entreprenuerial ring in the first place, nothing more important than messing around under the hood.

Sort of like when Dylan went electric - I'm sure there will be plenty of haters hating the idea the house isn't black on black.

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Houses -

I truly put so many deals together that I don't even keep count anymore - or more accurately, it's just all part of my daily routine that there is no high five moment. In just the past 45 days, I've put together about $5m of deals, very diversified with the narrow lane we work - 2 houses that we are building on other people's land, a house nearly finished (Fremont/North Branch), and house just starting (North Branch), and a house that is finished (Narrowsburg). The deals come together so seamlessly between my skills, my attorneys efforts on our behalf that I have to be careful not to overbook and leave Amanda once again on the hook for more homes than she can reasonably manage and design.

Prices and volume in the real estate market appears to remain strong for good homes. It is correcting some in terms of what people are willing to pay, but that's a good thing and we welcome the new price points where interest remains robust.

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Africa -

We've all mostly seen Out of Africa, but I read the book while traveling there, and if you go in looking for a mirror of the movie, you will be disappointed - the movie seems to have used the 'creative license' to the full extent in changing facts, timelines, events, etc...

If you read it on its own, as a meditation of life, Africa, life in Africa, loss, celebration, appreciation and gratitude, then it is worthy indeed.  The tone and pace and style reminds of Verilyn Klenkenberg, a columnist for the NYTimes for years and author of The Rural Life.

Highly recommend both. When the writing of a piece captures the pace of the story or environment, then that is valuable. For instance, Isak Dinesen, the Danish baroness who wrote Out of Africa, takes her time with her book, lets it meander and lose its path, a lot like the people of Africa at the time lived their lives - not in a future target ambition of some sort, but a live in the present ability lost to most westerners.

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Zebra

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It didn’t take long in Africa to be confronted with a lot of questions as we toured the cities and bush.  One that I asked myself, seeing all the zebras, but seeing none put to work like the donkey, the horse, the oxen.  I guess the same could be asked of the water buffalo, though that seems easier to answer since its closest North American relative is always undomesticated, unlike the horse.

So I started asking around, when you read and see all the human labors and efforts that could have been aided and assisted by a strong animal - why not the zebra?

So I didn’t get very far with human inquiry, so I delved into that all-knowing source of information - Google.

Turns out, the zebra is too jumpy, too ornery, too high strung, too ‘mean’, too stuck in its ways to domesticate.  After living its entire history in the African Savanah where quick predators lie in the tall grass, the zebra’s fight or flight instinct is so fine tuned, is tightly wound, that a few impatient attempts from the English colonists had no chance to overcome and supersede the hair-trigger response of a zebra to stress.
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“To be domesticated, animals must meet certain criteria. For example, they must have a good disposition and should not panic under pressure. Zebras' unpredictable nature and tendency to attack preclude them from being good candidates for domestication.”  (Google result).

From Science Alert -

All equids are herbivorous prey species with a well-developed "flight or fight" response. But to survive in an environment where there is an abundance of large predators including lions, cheetahs and hyenas, the zebra evolved into a particularly alert, responsive animal that flees in the face of danger but also possesses a powerful response if captured.

The kick of a zebra can break a lion’s jaw. They can be savage biters and possess a 'ducking' reflex that helps them avoid being caught by lasso. Familiarity with human hunter-gatherers may also have fostered a strong avoidance response in the zebra.

All of this means that zebra are not really "people friendly" and as a species they do not fit the criteria for domestication.

According to the English explorer and polymath Francis Galton (a relative of Charles Darwin), these requirements include displaying a desire for comfort, being easy to tend, being useful and showing a fondness for man.

Galton uses the zebra as an example of an unmanageable species, stating that the Dutch Boers repeatedly tried to break zebra to harness. Although they had some success, the wild, mulish nature of the animals would frequently break out and thwart their efforts.

Although it appears possible to tame individual zebra, this species was not a good candidate for domestication. In addition to the intractable nature of the zebra and its strong survival instinct, the fact that this species is 'lion fodder' may also have made them appear less attractive 'partners' to early humans."

So, the moral of the story is some things just can't be tamed - I could have told anyone who was listening that was the case from my hiring attempts over the last 20 years.

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