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.
Open House, Gatsby, Baker, Mercedes and Ulster County Sales
So I scheduled a model home tour de force today at 21 Willow Drive, aka Lawsuit House, and within 4 hours of the eblast, had covid-safe appointments every half hour from 9:30-3:30. Could have done 7am to 9pm but have to draw the line somewhere. (update - seemed to have signed up $3.2m of buyers today).
I don't often get to spend a whole day in a house we built, mostly because by the time we are done pounding the last nail, the mattresses are coming in the front door. But it's nice to get up close and personal and spend some time quietly in a finished home, see the talent of the team, and the inspired work of the client.
Of course I get up, and I bring the Benz E400, and what do I find but that it has snowed, then iced/hardened since we were here last on Friday, creating all sorts of complications for driveway access, slipperiness, etc….
Telling indicator the market is still strong (understatement alert) that a simple Model Home Tour fills up in a couple of hours. I think that it’s clear that normalcy is still in the distance, and the fact that NYC continues to deteriorate in terms of quality of life, and the fact that so many buyers have not been able to find a home yet will continue to put heavy pressure on the homes for sale inventory.
It has opened the door for more builders and designers to get into the game, but they seem only interested in the high end market, selling ‘design’ as much as quality and square footage. We’ve always been able to hit all three boxes - design, value, size - in a way others have had a hard time doing. This helps weather the storms that come and go.
The homes we are currently selling, that were priced back in April and May, are at least $100k under the price they would fetch now, and sometimes more. It’s a little frustrating, but we’ve calibrated, and more accurately priced our homes, while still being some of the best priced, most sought after stuff on the market.
Our homes are art. I’ve said it for a long time. And with this little bugger selling for $500k (I bought it and sold it for $250k)
Cottage 22 in Barryville in Sullivan County
and this one that was sold for $535k and built for $425k
Barn 16 in Bethel in Sullivan County
and these two which went for $800k+,
Farm 12 in Barryville,
Farm 33 in Rhinebeck,
the proof is in the pudding that our process - creative yet disciplined, fast yet controlled, flexible yet bordered, has enabled us to provide ourselves as a tool for a very talented set of people who have then proceeded to design and build really amazing spaces. As I’ve said from Day 1, the clients we work with, who are attracted to us, are talented, are creative and are smart, no two ways about it.
Did you know that The Great Gatsby just entered to public domain, 90 years after it was written? Meaning, anything and everything about it can now be used without any permissions or costs. I’ve been a Fitzgerald fan for decades, even finding myself in lamp lit university libraries over the years, reading literary criticisms of his work, shadowed by the bulging bookshelves neatly ordered and cataloged. I own an early addition of Gatsby that a girlfriend gave me back in ’98. I bring it up because Planet Money, the neat all things money podcast, is spending 4 1/2 hours reading it online, narrated by the voices of the program that we are all familiar with. I have to say, luckily my interest in the book is great enough overcome their nerdy readings - I don’t think Audible will be knocking any time to narrate Walter Issacson’s biographies of Steve Jobs, Leonardo Davinci, or Ben Franklin. Welcome to the Public Domain, F. Scott Fitzgerald. Sad to see you go.
This home in squatting in today, like many others, had a problem getting their appliances. It’s not just new construction, but a lot of people are spending more time in their homes, eating in, are realizing their appliances are lacking, and are insufficient. Hence, major supply issues. Nothing more disruptive to our process than a multiple day install.
Just finished a book -“James Baker, The Man who Ran Washington”, focused on a man who played a part in every major event USA was involved in from 1976-2010, often at the behest or the side of a Bush family member. Reagan, Bush, Iran Contra, losing to Clinton, fall of USSR, 2000 election debacle. Interesting for sure, if a little nerdy. I was reading about the Republic of Georgia overthrowing their government in 1990’s by marching on the capitol just as parts of our citizenry was marching on the capitol. Let’s be honest, a lot of governments have fallen with marches on the Capitol.
Amazing how amazing the print version of the WSJ is compared to their TV efforts. Unfortunately for America, more people watch stuff than read stuff. One of the billionaire English Barclay’s brothers died last week. He and his twin built up a business empire. What caught my attention is they started out as house painters, as I did. I get it - it’s a skilled job somewhat easily learned where you can make money and the cost of entry/setting it up is minimal. As an entrepreneur, I see opportunity everywhere I look as I think about how to mentor my son.
Looks like I’ve already sold 3 homes today. Amanda and the rest of the design staff are going to be pissed - I told them every year for the last 3 we were going to ‘take it easy and scale back some’. If I’ve practiced ‘deceptive business practices’ like Nerko tried to say when his out of bounds demands were rejected. I’ve deceived my hard-working team to think that the ‘easy year’ is ‘the next year that never comes.’ For 20 years, I might tap the brakes, but not for long.
