Holy fuck, business hasn’t been good? I can’t think of a worse time to get into construction than the last few years. I don’t know if it’s the fault of this family, necessarily, but they certainly could have used some decent business advice from somebody.
If you took a basic apartment dweller with no cash who said, “I’m going to start a business”, and in 5 years, he had $450,000 in assets and no debt, you’d consider him a pretty god damn good business man.
This guy’s business plan was telling a story that allowed him to acquire a $450,000 house. He should have stuck to that model.
Besides. . .as for really starting a business – not all businesses start with a giant loan and a dream. Lots of businesses start small, remain cash flow positive from day one, and grow soundly and slowly from there.
I wouldn’t be surprised if most successful businesses start that way. But, we’re enamored of the people who take a start up loan, and turn it into Netscape, while completely overlooking the millions of people who take out that loan and squander it.
“Starting a business” does not equate with “taking out a loan”.
It’s not the first house to go after it was presented. I told some kids how ridiculous it was that they added all that extra crap and made it so huge. The people will lose the house or have to sell it. The grade schoolers got the concept. Smaller with taxes or maintenance budgets for 5 years would be so much kinder a gift.
It a gift so the owners can do what they want. Build low income housing and charge almost nothing if they want to control the property after the show.
They could easily provide several needy families with basic housing for what they spend on one of those gauche monstrosities. But they have to compete for ad dollars with a lot of outrageous shows, so that’s why it’s called Extreme Home Makeovers. I’m not a fan…
We have the benefit of hindsight here. If this business had succeeded, we’d call them heroes for not simply sitting on their ass and letting life go by. It is risk takers who make our economy work, and sometimes it doesn’t work out well. I don’t think we should give these people any more shit than we’d give any other person who has had bad luck in business.
I would love a home makeover, but these days they just demo and rebuild. I like my 160 year old farmhouse, it just needs updating. Central heat and air and a second bathroom would be great. The floors leveled and refinished. I don’t want a McMansion, I want my farmhouse.
As for this family, they certainly don’t deserve to be bailed out a second time. Let the mortgage company have it.
Any competent financial planner would have told these folks that taking out a $450k mortgage in order to fund a business venture is very risky. It’s worse if that house is your only real asset. It’s worse than that if you don’t have any history of successful business management.
Yes, you have to take risks to make money, but it’s Finance 101 to distinguish between types of risk. There’s market risk, risk you get paid for, the difference in payoff for starting your own business vs. buying treasury bonds. There’s risk you don’t get paid for, like piling all your money in one penny stock, or putting up your house as collateral for an investment.
When you get a quote from Harper saying she was “harassed” by Chase Manhattan Bank, and she’s going to take “her” money and not pay the mortgage, it tells me all I need to know about their business/financial sense. They have none. When they say “A fool and his money are soon parted.” this is exactly the situation described.
I would have considered him extremely lucky. People’s reactions to what he did indicate just how pervasive the myths of success are in this country are. The default outcome of starting a business is not “success” and it’s not bad luck if you fail. Starting a business often leads to destruction, and succeeding is usually because of hard work.
You could have 1001 businesses start. 1000 fail. And, they will write books about the 1 that succeeded. That’s just how we do it.
This guy had a $450,000 house with the taxes paid on it for like 15 years.
They had a college fund for the kids.
Owning a home, and being able to put your kids through college SHOULD be (and probably sometime was) the American dream. It’s the goal for many of us. He had it handed to him. Dude, you did it. You got a great house, and your kids can go to college. Relax. Save your money. You’re better off than you ever had any reason to expect yourself to be.
He could have taken a $6.00 an hour job at Wal*Mart and been better off for LIFE than probably 75% of people out there. He just doesn’t get it. He thinks, “I got this. I gotta get more.”
Instead of using his freedom to start a business logically, he borrowed completely against the only asset he had. Retarded.
I can wait for the follow-ups to this story, too. . .how he needed a “Hummer” for his business, what kind of trips this family took, what he decorated the insides with. $450,000 sunk into a construcion business? I doubt it.
I used to watch it until I realized that it’s 90% everyone talking about how touched they were by the family’s story and how they wanted to help them, 7 % showing people doing stupid stuff (like Ty ripping off his shirt and yelling a lot) and probably less than 3% actually showing the house building/decorating/finished product. There is very little shown of the process of how they made this or that which was the reason I even tried to watch the show.
I also agree that they could just remodel homes or build smaller ones and help out 10 families for every one that they actually help now but I guess no one wants to watch that. I don’t understand how anyone wants to watch it in its current format.
As for the family in OP, I also can’t feel much sympathy when they basically were set for at least the next 20 years and only needed to pay their monthly bills which a steady job, instead of a risky business venture, would have accomplished.
I’ve heard rumors of this kind of thing happening for as long as the show’s been on. I don’t know the trustworthiness of the cites, but here are a few google hits on Extreme Makeover Home Edition foreclosures:
Even though the show pays the mortgage and taxes on the new house, it doesn’t do anything about maintenance (e.g. heating and electricity) or existing debts. So more than one Extreme Makeover family has sold their new house in order to live within their means once more.
Sometimes the show provides a house the family really can use because of a family member’s special needs. Other times, though, they’re providing more house than the family can afford and isn’t going to be able to keep.
Did they give any background on the family during the show? The news article doesn’t go into it. I’d be interested to know their financial history.
Some people are uncomfortable to the point of anxiety when they suddenly have more money than they’re accustomed to. They’re used to living on the edge – that’s where they’re comfortable, whether they recognize it or not. I spent one fairly large inheritance within a year, and gave another away (to my kids). I just couldn’t deal with the responsibility of managing a large amount of money. It was like being parachuted into a foreign country. “I don’t speak the language – who are these people – get me outta here!” I was totally out of my element and didn’t have a clue what to do. My parents were the same way, and so are three of my four kids. One gave several thousand dollars of her share to friends, another played the stock market, and another quit his job, leased a BMW roadster and moved to Arizona for a year. I imagine if I came into money again, I’d do the same thing.
Even if they sell, they’re much better off than they were before. If they sell their house and live within their means, more power to them. It means they have some sense.
RR