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Monthly Archives: December 2017

Finding Sustainability: Debt Metrics

In my last post, I argued that debt is usually necessary to grow your business—unless you intend to follow the old joke that the best way to build a million-dollar real-estate business is to start with $2-million. But you never want to focus on a single metric, especially when that metric is growth. I’ve known several business to grow themselves to death. Literally. So, today I want to talk about a couple of metrics that help maintain credit worthiness and business health:

  • Debt-to-equity ratio
  • Debt-coverage ratio

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Finding Stability: Growth and Leverage

Growth curve

Most pundits seem to believe that growth equates to success. Be careful when anyone focuses on only one metric.

Growth is the goal you have almost absolute control over. You get to decide if you want your business to make $10-thousand, $100-thousand, or more each year. You get to decide if you want to grow your business, shrink it, or shutter it.

That’s one decision I’ve never heard discussed in a business text or class. Everyone assumes growth is good, or at least necessary for survival, but that’s only true to a certain extent. Growth is only good when you need to grow or want to. I’ve seen many entrepreneurs get into trouble by growing their companies too fast and outstripping their resources.

One the other hand… Continue reading →

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Thoughts on Gentrification

Regular readers will know that we have been working on the Saint John house in San Antonio for a long time. It has had a pretty rough history, and things keep happening that make our job hard (contractor issues, a person living in it and messing up the floor, people stealing copper, drug deals in the yard, etc.). I just searched for St. John in our blog archives, and got depressed just reading about it.

The Saint John house, stripped and with repairs in progress.

Now, we put it back on the market a couple of weeks ago, and I did a big Facebook marketing campaign for the house that got lots of hits and reactions. It brought us a good real estate contact in the area, but didn’t get us many showings.

What DID happen was that people who live around the area where the house is located began to complain about what we had done to the house and the selling price. You see, it’s in a neighborhood that was historically occupied by working class black people, but the homes in the area are rapidly being bought by redevelopers and being fixed up with an intended purchaser that is in a different demographic. It’s a lot like the East Austin area, only a few years back. There are a lot of people who are not happy that the trendy folks have bought so much of that area, as well.

Well, Yeah

And you know what, here at Hermit Haus, we don’t blame them. Our goal in renovating a house is to make it safe, clean, and affordable by residents of the neighborhood. Affordable housing should be available to everyone, no matter what their income or situation.

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Keeping Our Eyes Open

Hey, have you missed us? We haven’t blogged for a couple of days, because three of us have been on the road, and once we got to our destination, we actually took a vacation and didn’t work!

Here’s the “cabin” we rented, Bear Cat Crossing. They have a lot of bear things.

While Carol and Russell are holding down the fort with their family, Lee, Anita, and I drove to Ruidoso, New Mexico, in hopes of experiencing a white Christmas. But, it’s unseasonably warm up here in the mountains, so the only substantial snow we see is on ski slopes and the sledding park. Nonetheless, the forests and mountains are beautiful, as are the huge deer and huger elk.

Are There Any Properties to Investigate?

Why, yes, of course there are. We always have fun analyzing the real estate market and looking at available properties wherever we go. This is an interesting place, since the economy primarily is driven by tourism.

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Oakridge Progress Update

I stopped by Oakridge, our only curent rehab in progress, yesterday, to check on the progress (and change a couple of light bulbs). For one thing, I noticed that there was a new roll-off dumpster out front, which meant the contractors had already filled the first one. The tiles I had pulled up were all gone, as was the carpet, paneling, and parts of the drywall and non-load bearing framing. Our contracting team has taken over and is getting stuff done!

Here’s a sketch of how the kitchen will look. It shows the cabinets, too, like the walls are lying flat.

It was surprising how much smaller the master bedroom looked without the carpet and the kitschy room dividers. It will also look a lot more like it’s part of this century, not the last. (See the gallery below, it’s the room that is very clean and plain.)

What We Are Doing

The plan is to open up the wall between the kitchen and the living room, and add a nice island to divide the space.

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