Q & A Episode 54 - Losers Are Winners Part 5: How a Million Dollar Home Almost Ruined Me & What I Learned From It

Aug 13

Episode #54 | Q&A with Mark D. Williams | How a Million Dollar Home Almost Ruined Me & What I Learned From It

In this Q&A, Mark gets candid about a major setback during the 2008 recession, sharing how a failed spec home taught him some hard life and business lessons. Thanks to some wise words from his dad, he learned not to fear failure and how bouncing back can set you up for even bigger wins down the road. It’s a real and relatable listen for anyone dealing with ups and downs in their career!

About The Curious Builder

The host of the Curious Builder Posdast is Mark D. Williams, the founder of Mark D. Williams Custom Homes Inc. They are an award-winning Twin Cities-based home builder, creating quality custom homes and remodels — one-of-a-kind dream homes of all styles and scopes. Whether you’re looking to reimagine your current space or start fresh with a new construction, we build homes that reflect how you live your everyday life.

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Mark D. Williams 00:00
Welcome to curious builder Podcast. I'm Mark Williams, your host. Today is our Thursday loses our winner series. And I thought I was overdue for me to share a losing story. So the whole point of this series is just to basically talk about things that have really, losses that we've had, or experiences that we've had that have led us to, you know, very difficult moments that all entrepreneurs go through, and really how is informed our future and how it's helped us. And so I was giving this some thought this last weekend, excuse me, and I think probably one of the most defining quote fail stories of my career was in 2008 I got overextended well before the crash. Was about 10 months before, you know, the stock market collapse, which was that October of 2008 and I bought a home. And do I probably it should have been a tear down. I basically fell in love with my own work, and I did it too nice. It was going to be a spec home remodel in a very desirous area. And I've never been great at doing spec homes, because I tend to do them too nicely. In fact, this was the last spec home that I ended up doing for 16 years. I'm doing one now for the first time. Took me that long in therapy to get over it. But anyway, going back to 2008 i a couple of mistakes that I made was that I did way too nice of a remodel. I could have just done a light update, and it probably would have sold, and I would have timing wise. Obviously, you can't, you know, predict a great recession like that, but I certainly would have been done ahead of time. Anyway. Long story short, I had this million dollar remodel and the stock market collapses. You know, I'm paying $5,000 a month for mortgage at the bank because I financed, you know, the construction work, plus to buy the home originally, and there was a couple things that I just in hindsight I should have been more aware of. For one thing, it had a tuck under garage, and the home that it was really going to appeal to was empty nesters and probably older people, and again, a tuck under garage with stairs. There was no elevator. You eliminated a lot of people that have mobility issues and had main floor living, but you had to get stairs to go up it. So that was strike number one. Strike number two, obviously, was the fact that it was historically one of the worst times to own a home and try to sell it, because everyone was completely in shock with what was happening in the economy. There was really no end in sight. And I remember I at that time, trying to think if I had an office. I remember I moved my office into the basement of this house because I thought my thought process at this point. I've been in business for only three years, so I'm very young at the time. I'm, you know, 28 years old, and I've got this home. I'm like, I don't need an office. I can office out of I've got a million dollar office. It's this home I'm trying to sell. So I office out of there, trying to sell it, trying to meet with people, trying to network. And I was just getting no no luck. And I remember very clearly, and someday I hope to have the same wisdom that my dad had, and the same courage to do this. Because now, being a dad of three kids, I understand how difficult of a thing that I had asked my dad, or what I perceive now, would be difficult, which so at that time, as I mentioned, I was paying 5000 a month, and I remember calling my dad, and because the bank won't renegotiate their terms, and the bank wouldn't give us any leniency, and I had, we had no other jobs going, As I recall, maybe a small remodel. So I know income coming in and only going out. And, I mean, at 28 years old, I just didn't have a lot. And so I'm thinking, I'm staring down the barrel this gun. What do I do? Banks won't give me more money. I can't find another job to get some liquidity, and I can't sell this thing. And so I called my dad, who had been a builder. He had retired, you know, in 2001 so well before this happened. And I just said, Dad, could I borrow $30,000 thinking it would give me five months of reprieve to kind of figure things out. I remember not wanting to ask him, because I felt like it was like I failed, or I failed. I felt like it was sort of a cop out, like, ask your parents for money. Like I didn't want to do that and but I felt like I had no other options. So anyway, I remember my dad just gave me very wise advice. He said, No. And he said, If I if you can't figure out how to stop the bleeding, we're throwing good money after bad. And he said, You know what is like? What are you afraid of like? What is, what is the fear that you're afraid of in he said, Is it fear of bankruptcy? Is it fear of failing? And basically, he said, is that it is that the worst thing you're afraid of? Because it's really not that bad. And I remember him being kind of funny about it. He said, I mean, worst case scenario. Are you? You go bankrupt and closed down. The house gets foreclosed on, you move home, you live in the basement, your mom makes you Swedish pancakes, and life goes on. I remember thinking at the time like, yeah, Swedish pancakes every morning, sounds pretty great. And I sort of laughed about it, and he said, You've got to go figure it out. And that was that. And in some ways, I've looked at that as like a really pivotal point in my career, because it was sort of like I it was, I had permission to fail, and that's really what the series is about. Losers are winners, and so I basically wasn't afraid anymore. Because what, when you take away the fear of failure, you realize that I'm not saying that there's not, you know, especially as you get older, not have a family, that'd be a lot different to face that now with three kids and a wife and other things, but at that time, you know, as a single person, no other responsibilities really in life, like failing wasn't really that big of a deal. It just I didn't realize it. And so I've likened it before onto like a trapeze artist, where you can perform the tricks with the net below you, but when you take away the net and failing, as, in this case, death, a metaphor like, are you more confident? Can you get rid of that fear of failure? Then sometimes fear, or sometimes that hunger? You know, you need that little pep in your step. You know, there's that. There's this great saying. I remember, it was in the book Born to Run, and it said that it doesn't matter if you're the lion or the gazelle in Africa, when the sun gets up, you better be running. And I've liked that a lot in business, that you know, you're busy getting busy or you're busy being busy. But like, business and being busy sort of breeds Activity. Activity. Breeds activity, you know. And I feel like having a little fire behind you definitely makes you get more creative. A lot of people have learned a lot of things when they didn't have much, because this sort of, you know, necessity is the mother of invention. So anyway, I say all that with it. From that point on, I really feel like my career sort of took off in the sense of, like, I fear, I wasn't afraid of failing anymore, because I think failure is a bit of a construct. It's not real. And there's lots of options even now, like, if something bad happened with our spec home, or I couldn't sell it, or whatever, like, I have options. We could sell the home we live in, we can rent a very modest home. Like, there are things you can do. It may not be what you want to do. It may not be the things that you thought your career would take, but I think the willingness to do whatever it takes to survive, like, that's a different kind of winning and sometimes just surviving is thriving. I think of how many businesses went out of business from 2008 to 2012 and I think in some ways, I look back and I was super lucky in the sense that I had only been in business for three years. I only had one spec home. You know, a lot of people owned huge land positions or multiple homes. And way more successful builders than I did was went out of business because they were overextended, they couldn't sell anything. And then with a lot of builders gone, when it did finally come back, you know, there are fewer builders around. And so then here I am standing in the pile of ashes, and I'm available where a lot of people weren't. And so we started getting more work at so anyway, how did I get through 2008 nine and 10? So I could sell it. So I thought, well, what if I could rent it? Could I at least cover my mortgage? So this led me down to interesting scenario. So I was able to rent it to a person I won't name, because who knows if I'll get sued. So I rented it to this person, and the craziest thing happened. So he rented it for a year up front. As I recall, it was like $54,000 for the year. And I remember I didn't want to touch the money because I didn't want to spend it, so I put it in a separate bank account at the bank, and it was just deposited there, and every month it would pay my mortgage to the bank. So basically, I would, I had a year of sort of reprieve from the guillotine.

Mark D. Williams 09:13
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I remember getting calls from the police because the guy, there was no blinds on the house, because I had not at that time, you know, we didn't do furnishing. We didn't do, I didn't have an interior designer on the project, or anything like that. That was really early in my career. And anyway, the guy was watching, you know, pornography on an 80 inch screen TV in the great room. And it was a family neighborhood, and all these, you know, moms and people are walking by the house, and they'd call the cops. Of course, my name is on the public record, so I would get called, and I'm like, I'm sorry, I'm renting the house. Like, I'm not there. I can't do anything about what this guy is watching or not watching. And I remember just being like this, you can't even make up this story. This is so crazy. So anyway, he rented it for a year, and he had a two year contract, so he was going to rent for a second year, and he tried to renegotiate on his contract that he had already signed. At this point, the recession is still not over. If anything, it got worse, and he was trying to, obviously, he had agreed to something, and I was trying to back out of it. Long story short, he didn't pay me for two months, and I had to evict him. I'd never gone through that process before, so I evicted him, and then I had the home back again. So now I'm back under the gun of trying to sell this house again. And I remember, at the time I was living in Minneapolis, I owned a house with my cousin, who's like my brother, and we were renting out a couple of rooms to college students down at the University of Minnesota. And there was two brothers, Carlin and Nevin. I'm good friends with them, even yet today, here now, 20 years later, and they were sleeping in the basement. They had two nickels to rub together, but it was two nickels more than I had. And I remember I was desperate. I couldn't make the mortgage, and I was back under the gun. I had no I had very little liquidity. Paid my mortgage. And so I remember I said, Hey, for an extra $100 a month, would you guys rent my bedroom? You can sleep in my bed. I won't sleep in a bed. I'll sleep on the couch. And they said yes. So I've often joked that, you know, you're in dire straits when you're renting to two college kids that have more money than you and you're sleeping on the couch in your own home. So I think that lasted for like, two months, and I I got a new a build job, and I was able to kick them out and say, Hey, you can go back to being in the basement and I'll get my bedroom back. And really, that was kind of the low point, for sure, financially. And then we sold the house to a single lady with a couple kids. It worked out perfect for her, and I think it's sold a couple times since then. It's to this day, it's the only home I've ever lost money on. I remember that was really difficult. I had to go to all my subcontractors and say, Hey, I lost six figures on this house. And there, were several people that I owed, and I'd never, not, I'd never owed people anything, and so I wrote down debt, I paid what I could, and I basically said, hey, you know, you guys are my people on my next homes. I mean, I you, I work with you on all my homes. And, you know, let's come out of this together. And they all agreed, and you know, there's still some of them today that I still work with here. You know, what is it 1617, years later, and we still have that shared experience. In fact, one of the framers who I was childhood friends with is has, is now my, he was the framer on that house. So it's just sort of interesting how how time works, and how you look back at that. So anyway, that was probably one of my bigger quote, loser, winner stories, and one that I often tell the people I've mentioned it before, not quite in this much detail on the podcast before, because I felt like it was a really pivotal moment. And I have a lot of respect for my dad and how he handled that. And I think just how we define difficult situations. It really helps us. I'm thinking of a quote right now that's been one of my favorite quotes, excuse me, for a long time, which is, you know, the same heart, the same hot water that turns a potato soft, turns the egg hard, basically, like the hot water was the same for both how we. Back to the situation is sort of up to us. And I think if you don't do something hard, it's hard to have future successes. I think I look at people that have had longer careers and are wiser than I am, and I think, again, I think a lot of people have had a lot of difficult experiences, and it's those difficult experiences we don't always want them, we're not always willing for them, but I think when we look at them as opportunity, I think that is when we really grow, and I think that's when we level up our skill sets, our you know, when you're desperate, there's all kinds of things that you do, and hopefully we have people around you that can support you. I mean, hopefully Desperation can lead to risky behavior, obviously, too. And so I think everyone navigates the difficult challenges in their life differently, and it's only in hindsight that you can be sort of be thankful for them. There's not too many times that I've had a difficult situation where I'm thankful for it in the middle of it, it's kind of like if you fall out of a boat and you're swimming to shore. You know, that's not that fun. But then we get to shore, you're thankful that you knew how to swim and you were able to keep going. And so anyway, that that's my losers or is winner stories, I'm trying to think if there's any others that come to mind. I mean, I guess some that come to mind are jobs that we've all lost bids. There's two homes that I bike by every Sunday, when I bike with my guys around a lake and I see these two homes that I lost out on, and I think there's nothing I did wrong. It's not really losing necessarily, but I think when we see a house that we wish we would have got, there's a little bit of a competitive fire in us that we want to do better on the next one. So again, I think losing is really important to our development, to being a better builder, a better entrepreneur. And I've made bad hires before. It doesn't mean they were bad people. I think they're great people, but they just weren't the right fit in the right house for our in house work. And so I think understanding that we're that we are all human, and we make mistakes just like our employees make mistakes, just like clients make mistakes. And so I think having some compassion with yourself and realizing we don't get it right all the time, but what can we learn from it? How can we get better? And in terms of hiring, I sort of joked that, and I think this is true. My last hire, I didn't hire them. My team hired them. And I think going forward in my career, my goal is to not hire anybody, but that my team would hire the people that we need, because I feel like they're more objective. They know what our culture is, and they're going to hire people that sort of fit in. And I think when you have a bunch of a players, a players want to run with, a players the A team doesn't want to play with the C team. It's not saying that someone who's green can't grow and get better, but I let the team decide that they want to play with and I'm pretty excited that I've gone through those you'd like to you'd like to listen to podcasts. You like to listen to people so you don't have to experience every single mistake to learn it yourself. I'm thankful for the times where people have shared experiences and I learned from them, so hopefully some of these will help somebody else. And I'm guessing there's a lot of people out there that can relate to some of the things that these series of missteps and losing have led to successes in their own career. Have a great week and see you next Monday for our normal Mondays. For those that have been listening to curious builder podcast, you know how much I love the contractor coalition Summit. It's been the single biggest force multiplier in my business over 21 years. We're excited to announce again that we're coming back to Chicago November 7 through the 10th. All the details can be found at the contractor coalition summit.com and under the promo code for a $2,500 discount, type in curious builder we'll see in Chicago. Thanks for tuning in to curious builder podcast. If you liked this episode, do us a favor. Share it with three other business owners. The best way that we can spread what we're doing is by word of mouth, and with your help, we can continue to help other curious builders expand their business. Please share it with your friends. Like and review online and thanks again for tuning in.