January was a record month for Hermit Haus. We closed on the sale of three houses, and one of our FortuneBuilder friends also closed on the sale of a house I helped finance. This business is really like the weather in Central Texas: prolonged droughts interrupted by floods. The droughts are periods of negative cash flow, and the floods are when you make the money to keep going. JD Esajian, who runs the CT Homes redevelopment business, once told me that if your house doesn’t sell, buy another one.
This isn’t a business for the timid or those who are risk-averse. You have to take risks to make money. As I’ve said before, the redevelopment business, unless you’re buying and selling multiple houses every month, is built on negative cash flow. You have to plan for it and have contingency plans for when your regular plans don’t come to fruition. Like when closing sales are deferred to the next month or even the one after.
By closing on the sale of three houses in January, we brought a lot of money into the company. Some of my friends might think it’s now time to trade in the old Jag for a new one. That’s not how business works. Here’s what we’re doing with all that money. Continue reading