Rags to riches, back to rags

This is the best place I could think of to post, if there is a better place, feel free to move.

My rags to riches, back to rags story

My father started in the hardwood flooring business straight out of high school. He worked for two major flooring companies in the tri-state area, before he was able to save the money to buy all the equipment needed to go out on his own. That was how the family business started up.

I was born in Connecticut, in a drug infested slum area. I don't remember a whole lot about it, I lived there until I was around 4 years old. It was a house, that was divided into 4 tiny apartments. I remember when I bashed my chin open, the doctor said it was the bone that cut through the skin. I remember one year I got a power-wheels four-wheeler for Christmas. It lasted a few months, someone came during the night and trashed it, and ripped out all the wires. The next Christmas my father and my “uncles” pooled their money together and got me a real 50cc four-wheeler. We kept that one in our living room at night. I remember there was a park across the street, there was broken beer bottles all over the place, every time my parents took me there, they had to bring a rake to clear out under the swings and slide. That is about all I can really remember about that place.

Dad got a raise, and we were able to upgrade to a bit better of a place in Connecticut. At least the neighborhood was better anyways. Stuff didn't go missing or get trashed if it was left outside. It was more rural, I guess it would be considered a suburb. Dad had to drive 45 minutes each way for work, but he said it was worth it. School started about a year later, the school really sucked. The teacher said I wasn't too bright, and took to sending me on errands all the time instead of trying to teach me. Her and the guidance counselor tried to get my parents to put me on Ritalin. Thankfully my parents took me to see a real professional first, who told my parents they were nuts. I didn't need no drugs, and that I wasn't the first kid from that school who went to him for a second opinion. So my parents scrounged to move us once again.

We landed in the country this time. Anyways, you can see we were steadily moving upward, from being poor in a ghetto slum, until we had our feet firmly planted in the middle class. I didn't get to see a whole lot of dad growing up, I never really understood why, and made me angry when I was young.

After high school I moved to white plains for a few years. Made lots of bad choices and mistakes. Went down the wrong path for a while. I am quite lucky I didn't end up dead or in jail to be quite honest. After I wizened up, I went into the legit family business.

It wasn't all peaches and creams, the construction business has always been full of short booms and busts. During the booms, you put money in the bank, trying to build up some savings for the future. During the busts, your savings got drained away. Never were really able to get ahead, but we had a roof over our head, clothes on our back, and food in our cupboard. A lot of people go without those things.

After a few years, business really picked up. We were one of the best, if not the best flooring crew in the tri-state area. I say this not because I am arrogant, but because it is the truth. If you wanted fancy floors done, in a decent amount of time, and done right the first time, you called us. Here is some examples of some of the type of work we did:






Sorry for the quality on some of those photos, they were old poloroids scanned by my crappy cheap all-in-one. I wish I had been a photo-bug back then, and took pictures like I do now. These days I take lots of pictures, before, during and after, that type of thing. But up here, people don't get no fancy floors really, even on the houses that are big for the area. Mostly they just install crap pre-finished floors, or carpet. Pictures of the fancy stuff would have been way more interesting. And the size of the houses, wow. Would have hundreds of pictures per house.

Anyways, during the boom in business, I started going through a mental boom as well. I started reading a lot of books on business, and general self improvement. I was doing a lot of personal research, talking to the big builders we were doing work for. I was devising a plan. I was going over the business' books, working out the numbers.

I started sharing my ideas with dad, who was now my 50% partner in the business. I had to work my way up like anyone would have, learn the trade. I was made a partner once I was good enough that he didn't have to waste any of his time watching to make sure I was doing things right, or correct mistakes I had made. Together, we came up with a solid ten year plan.

With all my research and interviews with builders, I found there were commonalities they shared. They used to be tradesmen, just like us. They were top of the line, just like us. The tipping point from working class to foremen was gaining a nice chunk of capitol to work with. Almost all of them got that start up capitol by flipping a house. So that was the start of the plan.

We started shopping around, looking for an old house, on a prime piece of land. One with potential. One in an area with good schools. We were saving like crazy while looking, getting a large down payment together.

During that time, my grandfather on my dad's side died. My granparents were hardworking people. They worked in the US first, until both pulled a pension, and earned their social security. Then they worked in Canada long enough to earn social insurance up there too. With all their checks coming in, they lived pretty decently. When grandfather died, my grandmother could no longer afford to live in the home they owned since they were 20 years old. We decided to take the money we had saved, and buy her out. We figured it would be a great investment, and also grandmother would not have to go live in some crappy nursing home. She was still active, still could take care of herself, keep the house immaculate etc. So we surprised her by buying it, and told her she didn't have to go anywhere. We would need someone to live in the house anyways, make sure pipes didn't burst in the winter and that kind of thing.

After that we began saving once again, and finally we found the house we were looking for. It was a pretty modest raised ranch, in the middle of a pretty rich town, with a nice chunk of property. The property came with lake rights to a private beach and boat dock, and it was on the main road as well. The town was in the middle of building all new schools. It was perfect. We put $50,000 down, and the house “was ours”.

The ten year plan, not only were we going to have the house paid off, we were also doubling the size, and adding an attached three car garage. By the time we were done, it was going to be the best house in an upper-class town already. It was going to be a tough ten years, we would be working 6 days a week, and when we came home from work, and on our “day off” we would be renovating. In ten years we would be selling for a nice profit, splitting the money 50/50.

Depending on how we felt, decide what to do. Either start building our own houses, or do something else. My tentative plan was to take that money and bank most of it. Go to college, become a child psychologist, and use the rest of the money to establish my own practice. His tentative plan was to just retire, and relax. The plan went smoothly for about 7 years. The addition and garage were already done, the renovation was almost done, we just had a few odds and ends to take care of. Some rooms needed fresh paint, we were going to put a fresh coat of poly on the fancy floors we put it, that kind of thing.

It hit hard and fast, the construction depression. Quite literally, we went from having so much work thrown at us we were keeping other companies in steady work with the run-off jobs, to nothing at all. It didn't take long before we ran through all the modest savings we had, just keeping up with the property taxes and paying off the interest on the mortgage. We had seen slow times, it was only temporary we kept telling ourselves. We can stay afloat long enough to ride this slump out.

By the time the business went under and we lost everything, the house had doubled in size, more than doubled in market value, and was about ¾ paid off. It was surreal. How could it be legal to own only ¼ of a house, but be able to take full possession of it and boot us out? A house that had doubled in size, and was completely gutted and renovated on top of it. We tried to get the bank to work with us, of course they wanted the house. It was too sweet a deal for them, so they took it. If not for buying this house in Canada when we did, we would probably be homeless right now.

We ended up taking what we could of the renovations with us, in hindsight we should have done what this guy did.



The little bit of retribution we got, still today that stupid bank is sitting on that house, paying nasty property taxes all the while. I hope it bankrupts them in the end.

Today, we live pretty modestly. Property taxes up here is “reasonable”, as reasonable as it can be paying rent on property you supposedly own. Especially to a town that screwed the family out of a whole lot of prime beachfront property, but I guess that is another tale, for another day. We pay less property tax per year here, than it would have worked out per month in the NY house. We eat once or twice a day. We got a woodburning stove for heat, with lots of trees to use. We restarted our business up here, but it is slow and tough. That is my story, from a middle class man that worked hard to raise himself up, and came up just short. Thanks for reading.

The purpose of my whole story is to illustrate, just how corrupt it has become. That for every huge success story out there, there are probably hundreds of people out there just like us. Do the right thing, bust your ass, and end up with not much to show for it. I was one of the lucky ones, we do have this house at least. For now anyways. Things really need to pick up, or this might not even last. It's stressful as hell.

Thank you for sharing your story. I'm sure many can relate to it. The sad realization of it all is though,no matter how hard you work or how much you put into something,you could never truly own it. Houses are always up for the bank to grab if you fall on hard times,and fall behind on taxes it goes as well. Should you get your business up and running again to a productive level,look up buying tax sale property at auction. Buy it at fraction of cost,fix it up and flip it. More profit that way. Good luck to you starting over here in Canada.

reply to post by AccessDenied

Thanks for the kind words. I am not too sure I would be able to do that and be able to look at myself in the mirror and sleep at night. I would be doing it with the full knowledge that I am taking part in buying stolen property, probably stolen from a guy or girl just like me. Just thinking about it makes me feel pretty dirty.

I feel your pain brother... I really do... It just sucks, big time! I had a similar situation happen actually. I was running an honest business for many years. All of a sudden well, I don't want to air the dirty laundry but everything FELL APART in a major way! Like a series of mistakes compounding, one on top of another. Most of which beyond my control. Most of which coming my way from the FED's. And in no time I was out out business. I put 11 years of hard work into it too, and I was set up nicely. I was doing very well. But the fed's shut me down for no good reason. I ended up selling everything and was lucky I found a place to stay. Like one little kids bedroom of a place. The alternative would have been living in a van, so I was very lucky to not end up on the street. It's so insane. But I learned "tons" in the process. But I really don't know what to do now. I don't want to do anymore business in the old industry I was in, especially for fear the g=v would take issue with that. So I'm looking at new ventures. But times have changed in so many ways. I'm wiser, but I have like half the energy of when I was in my 20's and getting ahead meant a lot more back then, Kinda like you sounded in yoru post. So now i'm left trying to pick up the pieces and figure out what to do next. I'm a bit fearful to try anything now too. Like my concern is if the fed's can basically shut down any business for no good reason then what hope is there? What can one do? It's just madness. Have to keep things very low key I guess. And I'm talking about very legitimate businesses. Nothing illegal. The good news is these scenarios are rare, but if they pick you then it just sucks. The other thing I realized just the other day is I've spent like 75% of my life working for the man in some way shape or form. And I'm sick of it. I haven't actually lived free, not at all. I've only lived 25% of my life for myself, doing what I want. I guess I can't complain as some people the ratio is far worse.

But anyway ya I feel your pain. I was talking to a guy today who's a biz coach and he told me that he lost everythign 2wice. And that every failure brings you one step closer to making it and all that jazz but still, when you're sitting here in someone else's basement and you're almost 40, and you're starting from scratch, it's like "oh shoot, now what do I do?". I just keep thinking things will eventually turn around somehow. And trying to build up the courage to try something again. But I know things could be far far far worse. And I did get to live "the dream" for 11 years. So I can't complain. I'm sure things will turn around eventually. I just wish things could have went a little different though. But hind sight is 20 / 20. So all you can do is keep trying and moving forward.

I like yoru idea about the house flip though. Try it again. It's the right idea. If you're gonna do that, just get into the house flipping biz full time. Do that for a while until you can buy an apartment building. Then just live in one of the units so now you're living rent free, plus you got income coming in. And meanwhile just keep house flipping. Then eventually maybe buy another apartment building near by. Like a small walk up 3 story. Once you got a couple of them, you got some decent cash flow coming in. Just retire. You don't want ot grow so big that you have no time freedom anymore. You want just enough so that you have enough to pay your bills, bank some money, and not have to deal with too many headaches. Time freedom is the key goal. but ya again I feel your pain. That's how llfe seems to work though. But it's like the refiners fire, the sword gets stronger when it's put in the fire and tempered, not sitting around getting rusty and weak. What does't kill you makes you stronger right.

It's hard to stay positive, and not be cynical, I try my best though. I kinda wasted my 20's, I am only a tiny bit better off having busted my ass, than if I took it easy, 9-5, 5 days a week and partied the weekend away. I think that is what stings the most.

The positive things that came out of that messed up situation I can think of? I learned a lot of different trades. Learned framing, sheetrocking, taping, painting, and roofing the most. I can do basic wiring and plumbing. Up here is seems you have to do many trades to get by. It amazes me the differences between here and NY. From work ethics(people up here take like 4 coffee breaks), work slow as hell and get paid by the hour, and no one specializes in anything. They do many things, but nothing really well. In NY you picked a trade and become excellent at it.

The "time off" has given me a chance to get into art in a big way. That is a plus, who knows, maybe people will start buying my stuff. Would be nice. I tried internet marketing for a few years, did nothing but lose money there lol. At least it wasn't a ton, buying hosting for a bunch of sites wasn't like the kinda money I lost in the housing venture. Not sure I can bring myself to try it again, it stings a lot. I try to stay positive, and keep an open mind.

reply to post by AccessDenied

Buy it at fraction of cost,fix it up and flip it.

I'm sad that you did not get the point that speculation is at the root of all of society's problems, his problem and even his creditors. The system is predatory it is eat or be eaten... just continuing looping it until it breaks for you and then for all doesn't seem the right solution...

reply to post by Panic2k11


I wonder sometimes if my ethics are the problem. I have never felt right "ripping people off".

Like my internet marketing for example, I wasn't one of those guys that just went around writing positive endorsements for and trying to sell everything. I only endorsed stuff that I felt was quality products. I thought that would build up a great following in the long term.

In my construction business, I could have made a lot more money, had I done things I felt were not very ethical. Like marking the prices of materials way up. I had to mark it up a bit, because it was my credit line that was extended to get the materials, and I was eating interest until I got paid after installation and paid the bill. There were guys out there getting away with crazy crap like 40% markups, I would not have felt comfortable with that.....

Sometimes I just feel I don't belong in this world. Maybe I am really an alien

TKDRL
reply to post by AccessDenied

 

Thanks for the kind words. I am not too sure I would be able to do that and be able to look at myself in the mirror and sleep at night. I would be doing it with the full knowledge that I am taking part in buying stolen property, probably stolen from a guy or girl just like me. Just thinking about it makes me feel pretty dirty.

TK,all property could be qualified as stolen. I understand that you would not want to do unto others what was done to you. Not necessarily my suggestion. There are many properties in the maritimes left long ago the deaths of aged parents and children who moved west. They stand derelect in every community I have seen here. I wouldn't suggest buying the sole property of a blue collar family,but buy into one that others have left behind. You seemed very disheartened about that not working out in your life so I offered a humble suggestion.

reply to post by AccessDenied


Hmmm, good point about people moving west. A lot have done so, hell, we are tossing around the idea in our heads ourselves. Not permanently, but maybe for some work. Maybe if there is a way I can differintiate why the house was taken. But then, I am not sure investing in real estate here would be wise with the sheer amount of people going west to make money off the oil and such. Things to ponder.

reply to post by TKDRL


I predict the boom in the west to end very soon, actually. If you look out there, lots of jobs, no housing. Alberta pays the lowest minimum wage actually, but has very high housing prices. I recently read about oil will be booming soon off the coast of Newfoundland, and sadly, I suspect fracking will bring the gas companies here soon as well.
It's true that many have jumped the east coast ship to go west..but do you know what? THEY ALL COME BACK
They go west for the money, but most come back home.
Just something for you to ponder. It's better to take your life experience, good and bad, and use it to create a future opportunity, versus letting it upset you.
Good Luck in whatever you decide TK.

Panic2k11
reply to post by AccessDenied

 

Buy it at fraction of cost,fix it up and flip it.

I'm sad that you did not get the point that speculation is at the root of all of society's problems, his problem and even his creditors. The system is predatory it is eat or be eaten... just continuing looping it until it breaks for you and then for all doesn't seem the right solution...

edit on 24-10-2013 by Panic2k11 because: (no reason given)

It's impossible to completely evade the system. Sometimes the best you can do is use the system against itself to better your own situation. Yes, it might sting thinking that someone's loss is your gain, but that is the yin and yang of the universe. Either jump in and fight for a slice of pie or starve. If the best you can do is avoid dealing with the banking system for your housing,why not do it? You have to be creative and unconventional in these economic times. Beats being homeless because the bank took your house.

reply to post by TKDRL


I think that people live life in a constant state of competition and fear, there is another path and it is not that complicated but it requires harder planning a strong will it is not the easier path but if there is any type of universal justice (and in part this is assured, like the saying goes one reaps what he sows, karma or action and reaction) then in the long run one is better of.

The concept is to live a spartan life, within ones means and toward self sufficiency (aka independence, of others and the system). Security in wealth and possession is a mirage (the more one has the more one has to lose and worry about), one does not need shiny new things if he keeps the his eyes in the long run (there is no free lunch but there are still free things), especially if he can commit (or benefit) for a multi-generational project... but this is not for all especially if starting from weak bases (culture and vision), but simplicity has its own rewards even if not take to the extreme...

reply to post by AccessDenied

It's impossible to completely evade the system. Sometimes the best you can do is use the system against itself to better your own situation

I have a strong dislike for the word impossible, it is hard and uncomfortable but it has its own rewards, self fulfillment and peace of mind being the better ones, there is much one can't be certain of but we do know what makes us feel good or bad...

There are levels of complacency to the status quo, and I agree that today the system is almost unavoidable but most of what makes us act badly is the pursuit of illusions and ephemeral things. The only certain you have in life is death and taxes, there is not much you can do about the first but there is plenty you can do against the second, even without becoming an outlaw...

I have thought about it a lot, the closest idea I can some up with is a huge commune. Even then, still not really possible to completely disengage. At the very least, the community needs to be taking in enough cash to pay the extortion, I mean property taxes. And that is if you are lucky enough to get a huge diverse population, need all kinds of construction guys, alternative energy, medical people, people that know how to grow and keep livestock, all willing to do their trade for free. That is the closest idea I could come up with anyways.

Just get a full time job at McDonald's and everything will be just fine.

On a serious note, I read your story and I can relate a bit.

I've never understood the need to pay taxes on something you supposedly own, like property. It's just another form of "creative" taxation without representation.

I just read your story, I like the flooring work. The big mistake you made however in my opinion was that you followed everyones advice. You can goto successful people and ask them what they did and they'll tell you. It however doesn't necessarily mean that plan will work for you. In this case you spoke to the winners from the housing bubble but none of the many many losers, and then emulated them. The bubble burst, and you lost it all. You also made a mistake in buying the home, you purchased the home with a down payment hoping for the future sale to pay off the remainder of your loan plus profit. This method of purchasing however is all or nothing, and when in a bubble that can burst at any time, those who haven't fully paid off the loan lose all the money they put into the house, and lose the house on top of that. The banks set these contracts up that way specifically... and then they bank on you not paying off the loan.

That aside, it didn't sound too bad to me. You had a relatively decent life... you had AC in the summer, heat in the winter, could eat multiple times per day, and you were even able to significantly help out a family member, and still put a bit into savings. That's already being pretty fortunate... perhaps you overshot and let greed get the better of you? If you try to hold too much, eventually you will drop it all.

a reply to: TKDRL

Thx for sharing your story. It sounds like you are a hard honest working individual who comes from a family whose done the same.

It's a shame the banks would not work with you on the house. They could have seen your history of business practices and seen that if given a little help in a bad situation that you'da probably pulled through.

Sigh
leolady

Just watch Shark Tank and see how wealth is created by taking advantage of other people's idea's, hard work and investments. Many of those people who go to the sharks would probably make it by themselves if they had some direction and advice, the sharks don't want to invest in any business that hasn't already proven itself as profitable. Money makes money, money provides opportunity, the love of and pursuit of money is the motivation, not the creation of an honest business for a decent return and living wage.

You may have been able to avoid the housing bubble and construction crash if you had the time to read the signs of the approaching storm. However, you were hard working, honest and believed in the American dream of having little to start with and working it up to a successful business. Your focus was the business, not wealth building, and I feel that is a higher goal to pursue, but the back stabbing banks, government and competition will have you in their sights and will endeavor to take your business, properties and hard earned savings.

Money and wealth gives you more opportunity to build up a secure and comfortable life, but it makes you a big target for greedy people whose only thought is to build their wealth on the back of people who did all the work. The Obama speech about how you "didn't make that" was just a lame excuse to justify taking what you built after it has had some success.

The American dream has died long ago, but enough people believe it to keep them hooked long enough to take it from them after it becomes a reality. The only true path to free market capitalism is through corruption and criminal activities that are sanctioned by your rich buddies involved in buying political power. Welcome to the machine, when you get in, they call it riding the gravy train.