Tuesday, July 29, 2008

Great Moments In Bad Business Ideas

Here’s the first three paragraphs of the AP article that enabled me to meet my daily quota of eye-rolling:

More than 1,800 people showed up to help ABC's "Extreme Makeover" team demolish a family's decrepit home and replace it with a sparkling, four-bedroom mini-mansion in 2005.

Three years later, the reality TV show's most ambitious project at the time has become the latest victim of the foreclosure crisis.

After the Harper family used the two-story home as collateral for a $450,000 loan, it's set to go to auction on the steps of the Clayton County Courthouse Aug. 5. The couple did not return phone calls Monday, but told WSB-TV they received the loan for a construction business that failed.

I am neither a carpenter nor a businesswoman, and if you want to run a successful construction company I’m not the person you should turn to for advice. But I do know enough to ask this: if you live in a “decrepit home,” and instead of fixing it yourself you require eighteen hundred volunteers to spruce it up for you, what the hell makes you think you've got what it takes to run a successful construction company?

28 Comments:

Blogger Caveman Lawyer said...

First off, I have to laugh. Oh the irony is thick upon this story. I must track it down and send it far and wide. Such syrupy sweet shows with their angst and pathos wringing hosts make me ill. I do love it when the people they help show themselves to be the prime reasons they were in trouble in the first place.

As for your last point, the question is not as much what made them think they could run such a business but what made the banker who approved the loan think they were a good risk? Did he simply look at the lavish newly remodeled home and think "Oh yes, this will sell... this will sell good..." Did he laugh an evil villain laugh when the people left his office?

You know, a $450,000 loan would have a minimum monthly payment of somewhere around $3,000 depending on interest rates and property taxes. That's a pretty penny when you have all the other costs of running a business. No wonder they went down. Especially when the construction industry looked good on the surfaced, but breaking into the market isn't as easy as it looks.

4:57 PM  
Blogger Jennifer Abel said...

Well, CL, mortgage lenders these past couple of years have completely ignored factors like "ability to repay" when giving out mortgages, so that doesn't surprise me. But seriously: if you have what it take to run a construction business, then you can fix your own decrepit home.

I never watched "Extreme Makeover," and all I know about the Harpers is what I read in this story, but I'm willing to bet these folks are among the dimmer bulbs on the Christmas tree of the human intellect.

5:08 PM  
Anonymous smartass sob said...

The Harpers? Hmm, that name sounds familiar. Couldn't have been Mama's Family, could it? Didn't they live in Georgia? ;-)

4:37 AM  
Blogger Michelle In Ga said...

amen

5:05 AM  
Blogger Caveman Lawyer said...

I sent this to a friend of mine, he recommended we contact foreign investors and start a show called "American Looser" which would air on foreign television stations. We'd give a family of losers $100,000 and follow them for a year or two filming their foolish attempts at "making it". We'd of course pretend to be dripping with pathos and angst for their plight when interviewing them but once the show hits the studios the hosts would mock the losers incessantly.

I figure two years would be more than enough for anyone to screw up the $100,000 gift. Most lottery winners manage to mess things up in 6 months. I'll bet we could find some trailer trash rednecks that could manage to screw themselves in deeper than they were before in a month for quick release.

We'd be rich! Rich! Rich! In money that could be really valuable! That is foreign money, not toilet paper dollars.

6:16 AM  
Blogger Jennifer Abel said...

Ooh! Sounds good! I want in! I'm very, very good at sarcastic comments that sound sincere to people with an IQ below 90.

10:50 AM  
Blogger Caveman Lawyer said...

We'll keep you in mind for the position of microphone in their face chick. The question is, hows your Mandarin?

11:06 AM  
Anonymous smartass sob said...

I'll bet we could find some trailer trash rednecks that could manage to screw themselves in deeper...

If there are none of those available, perhaps you could get some of those urban or suburban genius types that bought too-large houses with no money down and adjustable-rate mortgages. You know - the ones that also took out second and thire mortgages to augment their lifestyles. ;-)

4:03 PM  
Blogger Caveman Lawyer said...

Smartass, the ones I like best are the ones who bought homes and rented them out at a lower rate than the monthly mortgage payment. They are a special kind of stupid.

5:50 PM  
Blogger Jennifer Abel said...

But they were BUILDING EQUITY!!! (snark) Equity, equity, uber alles, uber alles in der welt.

5:54 PM  
Blogger Caveman Lawyer said...

I recall an Onion article, which I cannot find to save my life, where they mocked the whole home ownership-equity thing very well. It was hilarious, but it doesn't search up in their data base. Maybe it made one of the books so they took it down.

Equity is such a crock of shit. Sure the cost of your home may go up, but it may go down too. In some cases all you do is hold against inflation. Not to mention, to get your money out of it, without taking out that third mortgage, you need to sell the house. That is a bitch of a job in the long run. Especially if you want out when the market is going down.

8:10 PM  
Anonymous smartass sob said...

But they were BUILDING EQUITY!!! (snark) Equity, equity, uber alles, uber alles in der welt.

(snark) Oh jeez, that's so sexy when you do German. Can you do a half-ass Russian accent? I'll bet you could do a great Ayn Rand. ;-)

3:49 AM  
Anonymous A Moose said...

Call me jaded, but if I were to give someone a $450K asset assuming they'd keep it, I'd probably put some clause in there that if they sold or mortgaged it within a time period (five years?) they'd have to give 90%+ back to me on it. Keeps them from doing stupid shit like, well, these people.

6:09 AM  
Blogger Caveman Lawyer said...

Moose, a fool and their assets will soon be parted. No matter what you do to prevent their own idiocy from affecting them. The reason you can't create a fool proof system is fools are so darned creative in screwing shit up.

6:22 AM  
Anonymous A Moose said...

No matter what you do to prevent their own idiocy from affecting them.

No doubt. The waiting period would be to help me from feeling too much a jackass for at least some short period of time, that's all.

8:49 AM  
Blogger Caveman Lawyer said...

TV Execs aren't that bright Moose. That's what makes the reality shows so pathetic.

5:58 PM  
Blogger Isaac Bartram said...

I recall reading a story somewhere about an "Extreme Makeover" house that was so expensive that the owner could not afford to pay the taxes once the property was reappraised.

Furthermore she could not sell it for anywhere near what was in it because it was so out of keeping with the rest of the neighborhood. Not exactly "mansion next door to a crackhouse" but somewhere in there.

As to a moose's comment "...if they sold or mortgaged it within a time period (five years?) they'd have to give 90%+ back to me on it" Habitat for Humanity does just that.

First the owner agrees to a no interest (or low-interest*) loan for the basic cost of the house and land. Then Habitat takes a second which is basically an agreement to pay any profit over a set amount to Habitat. After a certain term the mortgage is cancelled.

Habitat clients are also put through an intensive (and rather intrusive to some) counselling process. Things like budgeting, family care and the like are taken up. Single mothers are also required to divorce an absent spouse before taking title and are strongly advised not to let boyfriends or other family members on the deed. The goal is to create a culture of self reliance and empowerment.

*I'm not sure, but I think the IRS might require the payment of some interest to keep it from being considered income or a gift. Getting a Habitat house is a real step up for most of the people that get one. Getting reamed by the feds is the last thing they need.

8:27 AM  
Blogger Caveman Lawyer said...

The goal of Habitat for Humanity is to get poor people out of trouble. The goal of Extreme Makeover is to use poor people for ratings.

Any other questions.

6:40 PM  
Anonymous A Moose said...

I used to run crews for Habitat a fair bit. Invariably I'd get the sorority sister pledges doing community service, which would have been much cooler had I been in my early 20's as opposed to mid 30's. Worst time was laying a block foundation, they couldn't handle the blocks and I couldn't stand up straight for a week and change after that one as a result, as I was bent over placing them all day long.

Any other questions.

Why yes, since you ask:
1) How does one calculate the Thevenin equivalent for an L/C circut? I can't recall.
2) What's the net upgrade cost to upgrade the current redhead to a new, improved model?
3) If a bear tries to eat my head, and I tell him to "Say Hello to my little friend", will the bear still shit in the woods when it's all said and done?
4) Are we there yet?
5) Brother Dave or Jerry Clower?
6) How many questions do I get?

9:09 AM  
Anonymous smartass sob said...

2) What's the net upgrade cost to upgrade the current redhead to a new, improved model?

HEY! Let's not hear any more talk like that around here. The current model is just fine. ;-)

10:45 AM  
Anonymous A Moose said...

2) What's the net upgrade cost to upgrade the current redhead to a new, improved model?

HEY! Let's not hear any more talk like that around here. The current model is just fine. ;-)


Not the same redhead. I was talking about the current owner occupied model which to my knowledge does not frequent these parts of the internet. Jennifer would be a fine example of a new improved model, for discussion purposes.

11:01 AM  
Blogger Caveman Lawyer said...

Why yes, since you ask:
1) 42. It's almost always the right answer.

2) 50% of everything you have and 30% of everything you make from now on.

3) Yes, he will shit tiny bits of your little friend for days.

4) No.

5) I prefer Rev. Sharpton for my comedy choice.

6) 42 is not the right answer here...

11:44 AM  
Anonymous A Moose said...

Why yes, since you ask:
1) 42. It's almost always the right answer.


I think I lapped 42 a couple times already, but I can't remember.

2) 50% of everything you have and 30% of everything you make from now on.

Makes one want to buy an annuity....

3) Yes, he will shit tiny bits of your little friend for days.

You underestimate LF, I believe. How 'bout bigger friend?


4) No.


Dammit, I have to go to the bathroom!

5) I prefer Rev. Sharpton for my comedy choice.

As long as you pay him under the table?

6) 42 is not the right answer here...

::whew:: Good, for a minute there I thought you were going to limit it that low.

12:03 PM  
Anonymous smartass sob said...

50% of everything you have

Not necessarily only 50%. Even in a community property state (Texas anyway) the Judge may divide the community assets un-equally and give the greater portion to the ex-wife. This is especially common when children are involved.

12:14 PM  
Blogger Caveman Lawyer said...

You underestimate LF, I believe.

I played with Al's "Little Friend" a bit. While the M203 can pack a punch, miss on that first shot and by the time you get another round in the tube the bear will be picking his teeth with the barrel of the M16. Shooting the bear with those pathetic 5.56 rounds is about as effective as tossing marshmallows at a wolverine.

How 'bout bigger friend?

I'd still rather have a pump 12 gauge with eight rounds of slug to hang with Smokey. A couple of those heavy lumps of lead punching into the Grizz will mess his digestion up enough that he may just think you aren't worth eating.

5:10 PM  
Anonymous A Moose said...

I played with Al's "Little Friend" a bit.

You must have missed the link. 454 Casull, even with a 2" barrel, does a bit more than 223 NATO in regard to bear issues. I'm just surprised that woman was attacked by a 150 lb black bear.

1:55 AM  
Blogger Caveman Lawyer said...

Ever since I serenaded my office for several minutes with a full volume rendition of "Hey everyone I'm looking at GAY PORN!!!" (with full video accompaniment of course) because I clicked a link from a forum I am a little more careful with my browsing. I almost never click on the hyperlinks on these places.

5:36 AM  
Anonymous A Moose said...

Ever since I serenaded my office for several minutes with a full volume rendition of "Hey everyone I'm looking at GAY PORN!!!" (with full video accompaniment of course)

That's fucking hilarious. Do you have the link? I'd love to forward it to a couple people. PS-Repeat daily "The mute button is my friend."

To bounce back from threadjacking, here's Habitat's statement on application. Note #3:

Habitat affiliates are independent, locally run, nonprofit organizations. Each affiliate coordinates all aspects of Habitat home building in its local area, including partner family selection. Your local affiliate can give you information on the availability, size, costs, "sweat equity" work requirements and application process for Habitat houses in your area.

Every affiliate chooses its homeowners based on the same three criteria:

• the applicants' level of need,

• their willingness to become partners in the program

• and their ability to repay the no-profit, no-interest loan.

10:12 AM  

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