I’ve heard from some of the old-timers in the real estate business that you have to be prepared to survive three major recessions and unexpected price shocks to make it through this business over the course of a lifetime. Which makes sense — every 8 years or so there’s sure to be a downturn, correction, or like recently, an awe-aspiring crash.
I started Catskill Farms, a design/build firm located in Sullivan County and now building in Sullivan, Ulster and Dutchess, in 2002. 2002 just so happened to be good timing, since the real estate craze of the mid-2000’s was still unidentified (though evolving and maturing). We rode that bull through 2006, and then got chased by the bear for 5 years — both were actually hard in their respective ways, and in some ways the bull ride was harder than the bear chase.
Starting a design and construction business in the middle of nowhere with my latent design and management talents still uncultivated — in retrospect — was more risky than it would at first seem. Luckily, one of those talents undeveloped was an accurate risk-gauging tool. Naiveté and optimism were the North Star of the journey.
The dirty little secret of construction and building is that it’s the subcontractors (the framers, plumbers, painters and excavators) that make the world turn, and we at the top of the food chain are really just beggars, brown-nosers, cajolers, and bribers of vendors and businesses that make the engine fire (or not).
We like to work with small companies, with the owner of the respective company onsite working as much as possible. A 5-man framing crew with the owner there, a 3-man plumbing crew with a father/son core, a painting company where the founder starts the engines and fires down the machine each day. That type of owner-presence on a job site (especially when the companies have done a lot of work for us and know how we like things) takes a lot of pressure off of our project management needs, and when you are across 3 counties and are not top heavy in management, that help goes a long way.
Thing is, though, during a construction boom, those small high-value businesses don’t need any more clients. They aren’t looking to grow, they aren’t looking to double their workload, they aren’t looking to miss out on raising their children so they can embrace a newbie, know-nothing client — which means that a new construction company has to fight tooth and nail to fill its labor needs — be it legal, architecture, surveying, engineering, framing, lumber supply, etc…. When the labor supply is tight, a builder’s job is not easy. Which is a bit counterintuitive, since you would think that a builder benefits from an improved economy, which of course is true — it just brings with it its own problems. Careful-what-you-wish-for type of thing. The rising tide definitely help float our boat, but it didn’t eliminate the waves and dangerous, leg-chomping aquatic creatures.
With a tight labor pool, a buzzing economy, and growing business, it’s a perfect storm for an early head of grey hair as your subcontractors are late, are always chasing the highest dollar, are always in a rush to get to the next job, over-charge for their talents if their talents exist to any degree to begin with.
Counter-intuitively, the time to be busy is during a slow-down, i.e. a recession — when great vendors and suppliers and tradesmen and craftsmen are required by economic conditions (and a slow-down of their existing clients) to look for new customers.
A slower economy is also a great time to design and build if you have a steady life station, because everyone just has more time for their client. But as the title of this post suggests, it’s starting to feel pretty heady again out here on the real estate front lines. Not in a frothy way, but in a healthy, fun, and exciting way.