The Hardest Job
It occurred to me the other day at how I got to where I got to. Many things of course, but a reoccurring theme is leadership, and defining leadership as being out front, taking the first bullet, cresting the hill without knowing what lies on the other side (too lazy to check if 'lies' or 'lays' is right). My brain works in a circling motion, moving from one end of my business operations to the next, searching for bugs, problems, issues that are unaddressed and threatening. If none are found, the brain circles again, an endless anti-virus mechanism.
But back to leadership. I do the hard problems, the ones that I think will be inefficiently tackled by unvested staff, the ones that could have ripple impacts across the production schedule, the bottleneck that is lingering, the minor hole in the dam that is threatening to grow bigger, quickly.
My daily question as my operational review brain cycles through the projects - where is the delay, where is the possible delay, what will be solved without my help, and where can I get in and clear the way forward for the troops. Bushwhacking with my problem-solving machete, my night googles, my forecasting wand, my stiff-arm and sometimes even an uppercut or roundhouse.
Happy Valentines Day.
Farm 57 - SOLD
Farm 57, a really cool farmhouse-inspired home in the Beechwoods in Callicoon in Sullivan County NY left the nest yesterday, amid another snow disruption snow day, making travel to and fro the closing treacherous and harrowing - or so I heard, I haven't attended a closing in years.
The was the 4th house on the 4th and final piece of land I bought a little over a year ago in Callicoon. Back when i bought it, it was pre-pandemic early 2020, and my thoughts on the marketplace was that 2020 was going to be a rough little year, with picky buyers and a slowing of the sales pace. On the other 3 pieces I built homes less than 1000 sq ft, priced in the low $300's, though I was expecting to sell them in the high $200's - no one getting rich there for sure.
It's been a crazy year to price homes. 2020 started normally - meaning challenging, unpredictable, and risky - and ended with even my Mom being able to build and sell a house (she didn't actually do that, but if she did, someone would buy it for more than it's worth). We have a slew of houses closing over the next few months, starting with Ranch 42 (Kerhonkson) last week, Farm 57 (Callicoon) this week and Farm 59 (Narrowsburg) next week. Then right into Farm 58 (Saugerties) and Barn 36 (Saugerties), so and so forth, working off a 21 house queue. At this point, we are signing contracts for delivery in 2022. Pretty amazing to be able to scale like that - my guess is most Hudson Valley builders have filled their plate and now they are booked until that is done - or worse, overpromising, taking deposits, and overbooking their subcontractors. We've been able to scale, hire, recruit, motivate, and are doing pretty good, though it's no easy task, and the weather since Xmas has been disruptive, and slowing things down, and causing a lot of work keeping roads and driveways open and safe for the dozens of trucks of all shapes and sizes that need access each day.
These Callicoon homes are pretty awesome, with big views, and open fields, but even with that, pre-pandemic, these sales were no sure thing for sure.
What's interesting about these homes, besides how awesome they are, is my reaction to the pandemic changing the pricing model. We started seeing our resales topping the charts from a pricing vantage, literally being sold at $150k or more than my new builds- that was eye-opening to a modest little builder, so house by house we crept our prices up to where the market supported, finally about mid-fall starting to price all the new builds at levels not seen before, and yet not even close to what the resale market was supporting. That's really always been our business model, when you get right down to it. We leave $$ on the table, give good value, make it hard to see 'why not buy'.
It's pretty great being past all the black swans of 2020, those wholly unexpected events, stacked and overlapping, needed immediate care and attention from me, unable to be fully and sometimes even partially delegated. Amazingly, there is more than the list below, but this is what I can gather right now -
- Website was deleted entirely, which served as not only our main sales portal, but also carried a gigantic load for our clients as they designed their home.
- Lead guy out without notice on family medical leave, severely disrupting chain of command
- Learned we nearly lost 20 years of digital files because our tech company failed to monitor our backups, which had gone off line for some reason.
- Pandemic
- Remote schooling
- Idiot contractor down in Valley Forge PA (Phoenixville) that turned a simple project into something that needed my full time attention.
- Moved our offices, never easy.
And then you had the everyday issues and problems that are challenging and all-consuming in their own right.
Whatever, if I can sidestep all the unexpected and deal with the tough-enough day to day of operations, and employees, and finance, and clients, and municipals, and sales, and closings, and contract, and accounting, etc... I'll be happy enough.
To pave the way for that goal, Jeff Bank - my main source of financing since my very first home in 2003 - just approved another increase in our cash flow line of credit, helping us meet the opportunity once again. Don't even get me started on those guys- relationships built and tested over time like that one is for sure one of the crowning jewels of this journey of mine.
Ranch 42 aka Lawsuit House, SOLD
It's been awhile since I've been dragged into a completely pointless exercise like I went through at Ranch 42. If I can be immodest for a second, that house is awesome. Great spot, great design, the sun it gets is world-class, and it appreciated $150k+ while I was building it.
When we sold it on Friday, none of the lawsuit threats resulted in a lower price, a retraction of a change order, better quality or a mitigation of some issue. Literally not one single thing was different than if we cooperated and were sending each other gift baskets, other than the waste of time, the cost of attorneys, the loss of good will, and the perversion of the mental and emotional respite that is the goal of these homes for our talented and hardworking clients. Not a single thing was achieved, literally. Maybe the thought was since I was holding onto a $600k I'd be motivated to act in a manner that solved the 'problem' regardless, but that wasn't the position I was in. I could have waited until 2099. Literally up until after business hours the day before closing we are addressing nonsense. And it should be said, there was literally NOTHING different about this house, deal, or product or process than the other 265 we've built.
And that brings me to my point of this post - other than a final vent, and the genuine hope that these clients settle in and enjoy their home since ultimately I play no part in overall life happiness- the point of my post is to reflect on how most situations have silver linings. Many successful people attribute their greatest failure, or their string of greatest failures, directly to their greatest successes. It's the effort, the perseverance, the overcoming of doubt, the ability to rally after defeat, dig deeper, try harder, be more creative. Solve The Problem.
(Yesterday we loaded up all the vanities, plumbing/lighting fixtures, etc... for 2 homes up in Saugerties)
Because I started out with few identifiable skills other than misplaced ambition and good writing skills, most of life has been a journey of lessons, hard lessons, embarrassing lessons, disastrous lessons - and in business, all the lessons come with a monetary cost. None are free. They can be crushing in their severity. But you get up, take a step forward, and move.
In this case, I learned a bunch. I'll spare you more of the above reflection, but one thing I did learn is how great our homes are. So seldom do I get to spend time in a finished home. This one sat around for a month after we were done, so I would stop by when I was in the area checking out other houses, I held an open house so I spent 3 hours there, and I did multiple inspections with my team and the client's home inspector. We build an extraordinary home - it's top quality, it's cool, it has great vibes and architectural feedback is loud, clear and warm. It's clear the team cares, and we are good at what we do. When you step back, out of the day to day operational muck, and you see what you are producing, and you know that it will be there for generations, and you've done it for 2 decades and 265 homes, and you are surrounded by the talent that can pull this off, talent that was scouted, hired, mentored, coached- that's cool. And that's the silver lining of this tale - I was able to see it, dispassionately, as I waited for the home to close.
I have a hike planned through the Gunks today. About 10 miles with my friend Brian who is the Editor of the Chronogram, 2 dogs. Gonna start out at 8 degress then move up into the 20's. I was thinking as I stirred on this clear, crisp Saturday morning, that the host of problems I had to solve in 2020 that were over and above my typical call of duty - pandemic, head employee medical leave, getting screwed by one of my real estate agents, losing my website, pandemic schooling, a dysfunctional hire in Phoenixville PA where I was building 3 modular homes that caused me a lot of heartburn, a bad hire or two in the office that I had to correct, serious stress on the cash flow as we doubled in size, and the general stress of a rapidly spinning wheel that you are worried is going to come off the hub - all of that and more, all behind me, with the accumulated and enhanced skill set each of those exercises demanded and created.
New Homes Goin' Under Contract.
Wow, I'm been sort of hiding out, not returning calls and emails, and telling peeps in a weekly template email to 'check back later'. So, I stick my head up for just a brief week and did 4 deals worth $2.7m. Now hunkering down and again and concentrating on getting all these homes built.
These Winners in Saugerties going under contract -
Winner in Kerhonkson
If there was any question as to the 'state of the catskills real estate market', at least for our stuff, it's remains robust. That's now 19 homes under contract of the 20 we have under construction.
