Punch lists and Customer Service
The thing I've learned about building homes is that's it's a tough business. And one of the things that makes it tough is that most people only do it once in their life. It's not like a haircut, or buying shoes, or a car, or buying an existing home - where you do it a few times so you have something to compare it against - good or bad. Some sense of relative quality or process.
But in building a home, the client typically doesn't have that, and hence has no real baseline for understanding a good but imperfect process vs. a bad process.
For us, I know building homes in 6-8 months, consolidating all the tasks like financing, land purchase, architecture - navigating the building departments, utilities, Board of Healths, zoning issues - dealing with the weather, the terrain and a hundred other items including a host of characters that make up the subcontractor group - I know that's a pretty big accomplisment, house after house, year after year, and now decade after decade. I think some builders actually expose their clients to the above and more just so they can seem like the hero who fixes and solves the problem, taking their clients to the edge of sanity, only to help them recover. Not us, we build, we power through, we deliver, we move on.
We also deliver with pretty good quality, and we deliver pretty much on time, we deliver on budget if the clients wishes and we deliver with a ton more flexibility in our 'standard choices' than anybody else in our space.
This I know - cause I've watched how other people do it. and I've seen how much of the process risk is shifted to the client, how many loose ends are undefined and left for the client. Even me, when I built 2 modulars in Phoenixville, got whiplash from all the costs that were mine that I was assumed were the responsibility of the modular company.
But, if you get tempted and drawn to build with Catskill Farms like 260 families over 2 decades, most of our clients have no baseline of understanding what is good, what is average, what is poor and what is somewhere in between. I mean, the expectations of a building company are pretty high - if your new car breaks down, you are without a car until it gets fixed - no mechanic is showing up at midnight to solve the problem. If you get something from amazon, and it doesn't work, you send it back and wait for the return.
And I have to say, we deliver a pretty good product, and have a great pre-closing punch out process that delivers a finished home about as well as somebody can. We routinely have our cleaning company go through houses the day of closing - in addition to 2 or 3 times prior - just to make sure they sparkle. It's not perfect, but it's pretty good, if you have something to compare it to.
But what is true, is after 8 months of extreme effort, we are looking to move on right when the client is moving in and looking for more, so you have this tug and pull of good efforts on behalf of the client without becoming their doorman or concierge. And then on another level of complexity is the fact that each client has a different tolerance of imperfection, making client expectation management a challenge. Every one knows a bad haircut when they see one, but judging the perfection of a tile install, or hairline crack where two boards come together, that's more massage and message than anything.
With my company, as I've logged over the course of last year, we had 240 homes to warranty, a slew of new clients, and worse, a half dozen projects that I had no choice but to tend to myself - projects and problems that needed to be addressed first - labor shortages, and a supply chain of everything from plastic pipes to lumber to windows causing us to spend twice the time to do half the work, administratively.
But as I wrote last post, or the one before, my mind works in a circular fashion, and besides using all my talents recruiting new team members, I think my next task is to catch up on minor warranty work for our valued clients. It's hard to balance all-consuming black swan issues, clients that are desperate to have a place out of the city and the promise we've made to our existing clients - and you can't really balance it all the time. But if you are serious about what you do, at the first opportunity you circle back and live up to your word the best you can. I think I will handle this task myself, catching up and leveraging my authority to marshal the troops where they need to be, and at the same time accomplishing something that has been missing for years - and thats my ability to stay in touch with my clients after my team takes over. That distance between owner and client isn't good for business.
And that's what is true about the black swan events - time is a zero sum game. If that scarce resource is needed for an emergency, then it is not available for something routine or strategic. It's the business builders who don't anticipate these 'sure to happen' events, although undefined and untimed, that suffer the most. Me, I'm accustomed to being hit along side the head with a 2x4 knocking me off course. That's just what happens when you move fast and break things.
Not planning for the unplanned or unexpected is like when a real estate investor doesn't properly plan for maintenance or improvements - it's going to be needed, and it's easy to under-budget, but just because you underbudgeted doesn't mean the costs and expenses will go along politely.
You might have noticed a lack of pictures. That's because this blog isn't allowing me to attach photos - just another problem to solve.
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.
