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Wednesday, October 3, 2018

Relationships (Catskills Homes and Real Estate

Ask my ex, and she would unceremoniously declare me unskilled in the relationship arena. On the business front, it has been 20 years of hardcore relationship building that has made all the difference, especially when it really counts. To be honest, I'm as proud of these deep trusted relationships than the sale of 165 Catskills homes in which live countless families whose lives Catskill Farms' has enhanced.
I know a lot of builders, developers - some new, some not so, but their business comes down to who is working with them. Considering how hard that team was to put together, I consider it our main competitive advantage.
Most of our construction relationships are now 10+ years old, at least 5 years. Dozens if not hundreds of homes together. Some of our best were forged in the great recession where we kept busy and some real talented subcontractors needed new customers because their go to contractors/builders didn't have any work. We needled our way into that space.
Our banking relationship with Jeff Bank gives us so many advantages I wouldn't even know where to to start. My main lender at the bank has moved up the ranks and is now President of this 100+ year institution. With customized lines of credit that are created for my needs, and molded and evolved as our business has grown, has supplied a constant source of funding for Catskill Farms. It's easy to say 'why wouldn't they lend, we've always paid our bills', but that's just not the way it works. For 18 years they've found a way to keep me from shopping other banks - they may literally be the longest business relationship I have, which is unusual since most businesses that have grown from literally zero revenue to $10m+ a year outgrow their banking partner. While the full board has needed to review any request I make, they still find a way to say yes most times.
We've outstripped the resources and talent of our book-keepers, our lawyers, our accountants, engineers, etc.. over and over. Spend all that time investing in a relationship, and two years later your needs don't match up against their skills anymore. Kind of like the canals that decorate our countryside - was any transportation scheme so arduous, labor intensive and so important and so quickly replaced with the next best thing (the train). So you stick it out and hope it works out but it never does - growth causes problems, constantly.
Be it our accountant, banking, or insurance, the day to day is satisfying, but what really counts is when you are in a pickle, when you need some individualized, personalized, creative action from one of your relationships, and they go to bat for you, and test out all their relationships, and bring home a real favor that plucks you from a corner of trouble - they can't do everyday, but when it mattered, the relationship was there. I personally feel help - regardless of which direction to which problem - be it construction, finance, insurance, law or employees - big-league help is just a call away.
That may sound obvious to persons not familiar with the inexperience and lack of relationships most entrepreneurs start the race with, where every problem is a problem they own wholly.
When I look back on this journey now, or in 10 years, as fulfilling and perhaps even more than the homes and families and sales and the $300m+ of Catskill real estate investment, will be the relationships I forged with some fabulous professionals.

Tuesday, September 18, 2018

Farm 46, and Recession Retrospection

As originally posted at LinkedIn.

Since 2002, Catskill Farms has been on a 'slow' but steady climb to bigger. We now juggle a balance sheet with 25 properties in inventory, currently being improved. Houses in Kerhonkson, land in Stone Ridge, homes in Saugerties, Milan, Bethel, Narrowsburg, Livingston Manor, and Cochecton. Oh, and I forgot Olivebridge, Eldred and a rental portfolio that spans Eldred, Barryville, New Paltz and now even Valley Forge PA. In the catskills real estate market, we found niches of business and opportunity throughout.
I don't mention this to boast, since just last week when my 9 year old son somehow bested me in Monopoly leaving me with little but over-mortgaged properties and a trail of debt and I commented that this could actually happen in real life (and he said I could come live his mom, her partner and him if it got too bad). It's an interesting story of step by step business building over nearly 20 years, and the challenges that creates.
I'm a big fan of How I Built This, a podcast that profiles business success stories ranging from Angies List to a snowboard company to yoga wear. All the interesting stories like this profile a process of unlikely forward progress with few attributes more important than old fashioned perseverance, which is different than risk tolerance, intelligence or education - in fact, many times it appears to be the opposite of intelligence, where any smart person would have changed tack long before instead of continuing to sail onward on a hopeless mission in stormy seas. I guess this makes sense that people would rather hear an 'up by your boot straps' rather than 'trust fund kid with unlimited resources turns small profit'.
For me, debt was a real motivator. Now the couple of hundred g's that loomed ominously over my head in the 2004 seems comical in small-time scale, but for my resources and ability at the time, it was proportionally gigantic. For me personally, debt was a motivator because I was the type of person who paid my bills, and it's funny how the credit score, regardless of how much money you have, really is a true weather vane of a person - there are those who pay their bills- however disruptive and inconvenient - , and there are those who find reasons -however credible and valid - who do not.
The thing is, there are few shorter-sighted actions a small business can do than neglect to pay a bill, or a bank, or a loan, or a credit card. The stain is real, its footprint lasts a long time, and its a real measuring stick for future financial asks. And especially for the small bank (jeff bank) experience that has fueled and sustained Catskill Farms, every single time I went back to the lending well, the small loan committee at the bank - regardless of their risk aversion- could fall back on the fact that not only did we pay our bills, period, we weren't late, we didn't ask for leniency, we didn't ask for favors - we borrowed, and we paid it back. Sometimes we had to borrow to pay it back. Sometimes we had to do without personally to pay it back. Sometimes we had to reinvent and reposition the business to pay it back. But it always got paid back - and it's a fundamental tenet of our strength as a business - our business decisions have allowed us to pay off our debts, and build those finance and vendor relationships uninterrupted.

Wednesday, September 5, 2018

10 Years Post Recession, Sullivan County Real Estate

(Farmhouse #1, Narrowsburg NY)
10 years ago builders and a lot of others were just beginning to see there was no light at the end of the recession tunnel, that the economy hiccup was much more than a simple case of over-leveraged indigestion. A lot of print articles and podcasts are doing fun retrospectives, of which I'm a big fan.
Catskill Farms, simply, had a great recession in the Catskills. One truism became evident - that if you are going to grow a business, if you can find the clients and customers, it's a lot easier during a recession than a building boom. It may seem counter-intuitive at first, but a deeper dive exposes the truth of it. It was especially true in the Catskills real estate market.
Recessions lower material and labor prices. Recessions free up high-quality labor. Recessions create slack in the supply chain. Recessions keep your vendors and suppliers fighting to earn and keep your business, since there isn't a new prospect anywhere to be found.
If you are remain busy as the marketplace place slows, you literally get to have your cake and eat it too. Catskill Farms survived - in fact prospered - for 3 reasons. 1, our bank (Jeff Bank) never left us, and 2, we remained close enough to our clients to hear up close and personal their changing preferences, and 3, our clients were AAA rated credit risks, and 4 (I know, I said 3), they lived in NYC, which was perhaps the only city in America that weathered the recession without real estate price declines and job losses. The recession was strong enough that anything but this inadvertently perfect business model failed.
I guess there's even another - this wasn't a primary home marketplace driven by necessity. It was a discretionary market, and with a nod to the disparity of experiences between those with and those with less, the discretionary market for those with discretionary tastes, held up - at least in my little sliver of the ulster and sullivan county real estate experience.
And it really was a little sliver. A little tiny niche we panned for gold.
Some of our homes sold in 2009, where banks were calling employers the day of closing, just to make sure the buyer still had a job - the epitome of reluctant lending, looking for any reason not to lend..

Farm 10 (just finishing up Farm 52), a 1800 sq ft piece of Sullivan County NY real estate, not far from Barryville NY.

Ranch 1, again, not far from Narrowsburg NY and the Upper Delaware River. A 960 sq ft beauty, sold to a single woman and her playwright boyfriend (now her husband).
And who can forget 720 sq ft MicroCottage 4.
Some of best relationships were forged during that time as an up and coming builder, when the region's best framers and roofers and sheetrockers found themselves with openings in their schedules for the first time in a decade, and Catskill Farms weaved their way in, provided work, stay organized and paid our bills which kept the motor turning.