Coming Home

The roads—and car windows—sure were icy on the way home today. Photo by: Suna

And it sure been a cold, cold winter

And the wind ain’t been blowin’ from the south

—Keith Richards, Mick Jagger

The trip home from Ruidoso took longer than expected. Yesterday, we took the long way to Abilene, where we overnighted in the same hotel as on the trip up. Unfortunately, we ran into a serious cold front just after crossing into Texas.

The night turned the roads to a skating rink, so we waited until almost noon to leave the hotel. The low pressure light was on for the driver’s side steer tire, but we couldn’t do anything about it. All the air pumps we passed were plugged with ice, and I couldn’t get air into the tire until like the fifth one.

The roads were so bad the trip from Abilene to the ranch took six hours. We were being very careful, despite the car being much smarter about driving on ice than me.

Anita was sick for the return trip and slept through most of it.

Ruidoso

See! I did get out of the house at least once. Photo by: Suna Suna sees life from my perspective by standing on a wall. Photo by: Anita

Suna wanted Anita and me to pose
together to show how tall the trees are.
I’m the tall one. Photo by: Suna

It’s gettin’ kinda cold in Ruidoso [wishful thinking]

And Abilene ain’t gettin’ any closer

—Charlie Daniels

This has been a very good week for me, all things considered. Suna, Anita, and the boys have gone hiking and exploring a lot while I have stayed around the house like the hermit I am. Of course that means I worked some, too.

We were supposed to close two houses while I was away this week. That didn’t happen. Both closings have now moved into January, which will make the Hermit Haus books look really bad at year end.

The weather has been unseasonably warm. At least one day saw highs in the seventies, and even the nights have been temperate. The ski lodges are having to manufacture snow. One waitress in town huffed, “You’re from Texas. You’ve had snow this winter.” Down between Austin and San Antonio.

 

Roadrunner: Week 9 Update

Grillo cuts a template to speed installing the siding around the newly replaced arch windows.

This post originally appeared on the 2016-07-29.

Yes, we're into the ninth week of our six-week renovation on the Roadrunner house. How did that happen?

Back Orders

Well, the primary culprit has been back orders. We thought we were ordering fairly common appliances, but Lowe's apparently didn't know the manufacturer was in the midst of an inventory reduction. The cook top we ordered didn't come in with the rest of the appliance order, which came in on time.

When we checked on the order, the cook top didn't have a delivery date. When we pressed the commercial desk to pressure the vendor for a date, they found out the manufacturer hadn't even scheduled another production run of the cook top.

Here is the siding installed around those arch windows. There are five of them in the front of the house. They'll look better painted.

We were able to cancel that order and order a different cooktop. But guess what? It didn't come in last Monday as promised. We'll see if it's here next week.

The arched windows were also backordered and didn't come in with the rest of the doors and windows for the house. We had planned on four to six weeks for the glass doors and windows to be manufactured and delivered. The bulk of the order came in after seven weeks. The arched windows came in 10 days later. There is so much new construction and renovation going on right now nationwide, the manufacturers simply can't keep up with the demand and are taking longer than usual to fulfill orders.

Invisible Repairs

This drain should prevent water flowing from the driveway into the garage. We'll see how well it stands up to hurricane Harvey.

Remember all those "invisible repairs" I've mentioned in this series? Well, many of them were unplanned, like having to reframe some of the windows we're replacing. It turns out the old windows were not only ugly and inefficient, they were beginning to leak. The leakage had caused some of the framing that holds them in place to deteriorate. Had this been allowed to continue, the damage could have extended to the walls and eventually made the house unsafe. We don't leave problems like that when we find them. We fix them. Luckily, we were able to get the house dried in again the day before Harvey hit.

We did complete two more "invisible repairs" this week. One was planned, on was not.

The unplanned repair only took a couple of hours to complete. We replaced the retractable attic stairs and repainted them. We hadn't planned to replace them because they looked fine during the inspection. But at some point, as different people accessed the attic, one of the springs gave way. Rather than replace the spring and leave the other one for someone else, we replaced the whole stair unit.

The planned invisible repair fixes a drainage problem. The driveway was sloped to drain into the garage. A previous owner had nailed a treated 2x4 across the entrance to keep water out, but that was an ugly solution that cause a trip hazard. So we cut four inches out of the driveway next to the garage and installed a drain. To get the water away from the house, we ran drainage pipes to the side yard. From there, the water will flow naturally to the small creek at the back of the house. Harvey will be a great way to test the effectiveness of this fix.

Hopefully, we'll be able to put the house on the market next week without any more delays. We'll have to see what Harvey does.

What Do You See?

What do you think of when you see something like this? If your first thought is, “I wonder how I can use this location to make money,” you may be an entrepreneur.

This post originally appeared on the Hermit Haus Redevelopment website on 2017-04-25.

What do you see when you spot an abandoned building or a closed business?

The trick of being a successful entrepreneur, especially a commercial real estate investor, is to see opportunity where others see failure.

This fact was brought home to me by the recent closing of the Sonic Drive-In in the small town where I spend most of my time these days. This being a Small Town, the closure was a big deal and sent the small town grapevine into overtime. All kinds of reasons for the failure were floated until another business closed for failure to pay sales taxes to the state. (We know this because the state is auctioning off all their assets.)

But the one thing that nobody talked about in either case was: "What’s going to happen to the building?" Okay. Nobody talked about the loss of a handful of sub-minimum-wage jobs, either, and they certainly should have. Finding new jobs in a rural small town is no easy matter.

Spork intentionally reuses old Sonic locations to its special purpose niche. Photo source: Dallas News

In kind of a combination of those two thoughts, my initial reaction on seeing the sign at the Sonic (I learned about the other closure much later) was, "I wonder what kind of business could go in that location." You see, a drive-in is a very special-purpose building. There aren’t a lot of other options for using it. In fact, there are so few options and it is so costly to build that Sonic has a program to repurpose other commercial buildings as drive-ins.

So there aren’t many alternative uses for a defunct Sonic, but there are a few. I’m going to list some, and I invite you to add anything else you can think of to the comments. I’d like to figure out how to bring at least a few jobs back to the local economy.

• Another drive-in or eatery
  Okay. That’s kind of a no-brainer. I’ve seen several old Sonic locations recycled like this. There’s even a Dallas chain, Spork, that targets old Sonic locations to put in "high-end" drive-ins.
  But the question here, is why did the Sonic fail? Sonic, after all, has extremely well-honed systems and a national advertising budget. If a Sonic with these advantages fails in a given location, what are the chances of a one-off restaurant succeeding there? Restaurants have a higher initial failure rate that just about any other business. One reason may be that they are so easy and cheap to start. Like many mom-and-pop businesses, restaurants tend to be under-capitalized, making it difficult to survive until they can become profitable a few years down the road.
• A used car dealership or other business office
  As with any investment, having more than one exit strategy is key to success.
  I’ve seen this happen in South Texas. The used car inventory was parked under the awning, and the kitchen became the sales office. But that business eventually failed, and the location is now an insurance office with plenty of covered parking. The used car idea is also being tried again in Missouri.
• A flea market or art fair
  Wouldn’t this idea just be perfect, assuming you could get the location cheap enough to be profitable? Each stall could be a vendor’s booth. Customers could drive through the location and only stop if something caught their eye. Of course, parking might become a bit problematic if you had enough traffic.

There are reasons why I wouldn’t try any of these ideas myself in this location. Mostly because we already have more of each of these types of business than I believe the community can support. But I’m sure there is something that can be done. I just don’t know what it is yet. Maybe we can figure it out together.

Setting Your Goals Starts the Process

These are the qualities of a well-crafted goal. For example, we want to acquire 36 properties (specific, measurable, and relevant) this year (time-bound). It should be attainable, but it is our stretch goal. Photo by: ClipartFest

This post originally appeared on the Hermit Haus Redevelopment website on 2017-01-31.

Only you can define success for your business. Don't let anyone try to convince you you're not successful if you're meeting the goals you establish for yourself. If you want to rehab just one house this year, you're a success if you accomplish or start one project. If you do that, and you want to, you can set a higher goal next year.

But you can't stop with just setting a goal. That just starts the process.

Let's focus on 12 projects for the year. What do you have to do to get there? You can't just look at 12 houses, buy them, rehab them, and sell them. Well, you can, but not if you want to make money and stay in business.

There are basic numbers for each stage of the deal. At Hermit Haus, we know we closed on about 60% of the houses we got under contract, or about or about 42% of our offers. We made offers on almost 46% of our active leads. And only 36% of our prospects became active leads. All-in-all, we acquired about 4% of the prospects that crossed our desk. (We can debate the efficacy of those numbers at another time.)

Think about that. To buy a house, we had to have 25 prospects, and our acquisition rate is much higher than the industry norm. (One reason is we only track the prospects we spend time on, not everything that gets presented. And I still don't expect to be able to keep the ratio that high this year.) To buy 12 houses, we would need at least 300 prospects. That's more than one serious prospect every business day. And our actual goals are significantly higher than 12 projects this year. We don't want to manage 36 at a time like some folks we know do, but we have shown we can certainly manage more than five at a time.

And managing multiple projects requires managing your goals. Next time, I'll talk about how I do that at Hermit Haus.

If you have questions about goal setting or want to help us attain our goals, email me or leave a comment.