Once again, Fernando, real good information, especially for young builders. Like yourself, I was fortunate to get into multi-family units early. I built my first new small multi-family about 36 years ago. I built it in stages and entirely from savings, without a loan, paying as I went in sweat equity and spare cash.
Just the other day I figured out that over the years it has earned me, in rents and appreciation over two million dollars (inflation adjusted to 2012 dollars). It has paid every nickel of my family's basic living expenses. Thereby, it has, in effect, rendered the net operating income from my construction operations and writing into "free cash flow," available for other investment or to support non-profit ventures and fun. And, by the way, I have rented (very carefully) to a lot of great people. To this day I enjoy being a landlord who provides a good home at a fair price. Hopefully, this little tale helps inspire some young builder to create similar good luck for himself.
Please keep your wonderful blogs flowing.
-- David Gerstel --
I'm going to stay put, but even so that story about Jim was just plain good reading. -- David Gerstel --
“The opening line -- you don't have a business if you can't leave for a month and I (Benshoof) can fix your problems -- put me off. My instant gut reaction was: oh geez, is this guy another one of those self-styled construction industry experts who could not and/or has not run a construction company and is now going to feed us a bunch of glib clichés while glorifying himself. Those folks are as thick as fleas on a hound dog in our industry. Turned out he is not one of those guys, and my reaction is another lesson in the danger of confirmation bias: you get a story line embedded in your head and you tend to quickly read info in accordance with it. In contrast to the impression I got from his opening line, Benshoof comes across as very well informed, thoughtful, and low key, not arrogant. His core point -- "you've got to know your numbers," to quote a friend who like Benshoof is an entrepreneur with an MBA and with big time corporate experience -- is so important. They are dead right. Way too many of us, including myself when I started out as a builder, have gone into business without committing to the core work of running a business, namely the management accounting that Benshoof insists on. We go into not-working-for-a-boss and call that owning our own business. That said, with respect to another fundamental issue that Benshoof focuses on, I do prefer a somewhat different approach. The kind of business planning he suggests seems to me a bit too tidy for the turbulent realities of the construction world.”
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