Good Tuesday morning to you!
This email will wrap up my series on the basics of homebuilding financial terms that you need to know. Stick around until the end - as I have some exciting (but, admittedly, scary) news to share!
If you've just joined my newsletter (thank you very much), the past few weeks, I've reviewed:
- Assets
- Liabilities
- Owners' Equity
- Revenue
All of these things are primary headers on your financial reports (the Balance Sheet and the Profit/Loss Statement).
The final financial category that we need to review today is: Expenses.
Now, I'm willing to bet you know what "expenses" are. I mean - we all have these in our everyday life, and Home Builders are no different.
These are essentially those items that you need to pay to keep the doors open in your homebuilding businesses. Things like:
- Rent/Mortgages
- Auto payments
- Salaries
- Insurance
I think you get the idea.
BUT - before I really understood much of these financial things (and was just pretending to know), I thought the things I paid for to actually build the homes were expenses.
I simply looked at these things as a simple cash-management concept. It was cash going out of my business - so I labeled that "an expense." And when things got tight, I started thinking of things in our builds that we could do without (thinking that was saving "expenses").
Had I been the lucky recipient of this series of emails, I would have better understood that those "expenses" were really "Assets" - as they contributed to my Work In Process that would be turned into cash at the end.
Hey! Don't judge. 🤣🤣
Anyway, if you know your expenses (and you should), you'll know how to keep these in check!
​
-Brad
Some Big News!
OK - At the beginning of this email, I teased that I had some big (and kinda scary) news to share with you. And this is it!
I entered into an Agreement of Sale to purchase an infill lot in uptown Harrisburg, PA. This lot is actually THREE lots in one - and, if all goes as planned, I'll be able to build a triplex unit (that's three attached townhomes together).
This is the first building I've considered doing since 2017 - when (if you know my full story) our family businesses had their ultimate demise. You see - we had too many expenses/overhead and never quite rebounded after the crash of the late 2000's.
So, I'm looking to see how this goes. It's very exciting AND scary for me. And, I'll be honest, I have the internal struggle of "hell, yes" and "what the heck am I doing" that is consistently happening right now.
But - I'm exploring this. Right now, I'm in the "due diligence" period of the Agreement. And that means that I'm researching how possible this deal may be for me.
So - the next series of emails will allow you to come along on this journey with me. Right now, I don't know how long it'll go. Maybe it'll just be a week or two and I'll think that it's not a good deal (or my "negative Nelly Angel" will win out and keep me from doing it), and I'll shut it down.
Either way, you'll get a look at the things it takes to get a homebuilding company (re)started.
I'll be using BuildTools software as I explore this - a software that I know very little about (even though it's one of the software programs offered by ECI Solutions - where I work fulltime during the day (just for another homebuilding software made for Home Builders that are bigger than me).
Hope you'll stick with me and enjoy (AND/OR throw some encouragement my way).
Happy Building!
-Brad