Tales from a Homebuilder
The BMW Method

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By BuildMWell
February 8, 2007

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In the home builder thread I said, "In my state anyone who passes the exam can build projects as large as $350,000 with just $25,000 of working capital. That is a sure way to go broke. However, I know that the ones who know how to run their businesses well can make a lot of money."

I decided I should expand on that thought. It is how and why I invented the BMW Method. Once I decided to become my own stock broker instead of a builder, I approached my new job just as I had approached all of my previous jobs.

In 1994 I left my last job as a full time, paid employee; I started my own construction business. I had been building homes for myself as a hobby business because I loved construction and I was able use my engineering skills to design what I would later build. I had been doing that since 1969 because it was the only way I could afford to own a home. As they say, "Necessity is the mother of invention." But, my story starts seven years before that.

I became an engineer because my Dad made that decision for me. I was enrolled to attend the School of Design at NC State University, and my Dad took me to Raleigh to look over the campus. That was early in the summer of 1962. While we were eating in the cafeteria, a fellow walked by our table wearing a ponytail, a goatee, one very large gold pierced earring, sandals and very sloppy clothes. My Dad asked our campus tour guide. "Who in the Hell was that?" The guide casually said, "Oh, that's one of our design students."

In the summer of 1962, that design student was really very, very strange looking. Today, he would fit right in and no one would give him a second look. 44 years ago, the sight of that guy was a life changing experience for me. I knew immediately what was going to happen. I have always had a knack for seeing into the future.

A few hours later, we were on our way back to Charlotte and my Dad said, "Boy, you are not wasting my money in that damned School of Design, it's Engineering or nothing for you." So, I changed schools to Mechanical Engineering. Actually, I switched to Aerospace Engineering until I figured out how much I disliked that field. Straight Mechanical Engineering was my final choice for a profession.

I guess I always craved that design school education because I have always loved building houses...I enjoyed designing them even more. So, my hobby allowed me to do both and to make money along the way. But, that was not my career, it was just a hobby.

Anyway, in 1994 I was out of a job because I was fed up with the corporate rat race and I just quit. I had saved enough money so that I could start my own construction company and sell my wares. I soon learned the problem with dealing with the public. I was building what I designed and always used the top quality materials. Even so, customers would nit pick about the craziest things...and that drove me nuts.

For instance, I designed a "Country French" home that was absolutely fantastic. It was built on a lake with a tremendous view, and the interior details were flawless. The dining room had custom made, hardwood wainscoting. One customer looked at that gorgeous dining room and said, "I want you to pull out that wood and put in sheetrock. I refuse to pay for all that custom work." Did she think that all of that beautiful craftsmanship could just be thrown away to recoup the labor and materials for her benefit?

In another house, I had allowed money for the owners to select their own hardware for the doors. The buyer hired an interior designer to help with the finishes. I installed precisely what the designer selected, the correct model numbers, finish and color. The total cost was $5500 versus my allowance of $2500. The owner was supposed to pay the difference according to our contract. As it was being installed, I thought the hardware was about the ugliest selection possible, but I had my marching orders from their interior designer.

The owner took one look at the completed hardware and blew his stack. He refused to accept it. Either I had to change it to his wife's satisfaction or they would walk. I explained that the designer had selected it and I just did what she had directed. That fell on deaf ears.

I was already out the $5500 and I was sure I would have to change all of that hardware I ate the loss and actually ended up installing the same hardware that I had proposed to use in the first place. Everyone was furious, but the builder always gets the blame. He is the one with the money...and he wants to sell the house and move on to the next one.

The designer even argued that I should have called her once I saw how hideous the hardware looked. I later learned that she had been asked to use that hardware by a customer on another job and her employees failed to catch the incorrect model numbers in the specifications my house. It was just an oversight. Anyway, it was a lose-lose for me. I could fight like Hell or just go with the flow...I had a nice profit in the house even with the screw-up and I still have $5500 worth of hideous looking, slightly used hardware in my garage.

I can tell you more stories like those than you ever wanted to hear. I have probably already told you more than you wanted.

After seven years of this, I had enjoyed as much of being a contractor as this human could take. One night I sat down and reviewed my situation. I was making almost exactly 25% on my business, but the public was so hard to deal with that I was getting frustrated. So, I looked at my working capital and thought about a different business. I had been working on the BMW Method since 1994 for my investments and I had slowly put more of my money into stocks using my new method. It occurred to me that I might be able to make 25% on my money without the joys of running a construction business. If I could, why waste my time and effort building houses that people failed to appreciate?

All I needed to start "The BuildMWell Company" was the computer that I already owned and a desire to make money without a construction business. So, I fired myself to force me into full retirement at age 56. I had originally considered myself retired at age 50 when I began "Dovetail Builders" because I did not pay myself. But, this time, I was completely retired. It was by far the best thing I have ever done. I recommend it to anyone.

Designing and building houses is a great way to make money, but investing with the BMW Method is better. Working for IBM in the 1960's was a hoot, and working in pollution control from 1978 to 1994 was a great job. I loved all of my jobs, but being self employed and being my own stockbroker is the most fun...and the most lucrative.

I began in 1967 with $325 in the bank, a well worn 60's Volvo Sedan and a B.S.M.E. degree. 40 years later I am retired with plenty of money, more cars than any human should own and my degree is worthless. I never used much of anything that I learned in college....except Engineering Economy. I took one course as an elective and that course made all of the difference. The course was about using the time value of money in making engineering decisions. I used that knowledge from 1967 until 1994 making money for the people for whom I worked. I finally figured out how to make that knowledge work for me. But, I could never have done it without working capital. I had to earn that working capital myself and I can guarantee that I know exactly why it is called "working capital." I had to work hard for every penny of that Capital.

I hope that sharing the BMW Method with you folks will help other people get to where I am on an expedited path. No use making the same mistakes I did along the way. If I had figured out the BMW Method earlier, I would have surely retired even sooner. Instead, I gave my money to stock brokers and trusted them to make me rich. That trust set me back at least 10 years, but it did not stop me from getting where I am today. Of course, they were using me to build their working capital too. I think they won.

I couldn't have arrived here much earlier anyway, the Internet wasn't available to the public before I started the BMW Method. In fact, it allowed me to do the necessary research needed to invent the BMW Method in the first place. Everything just came together at the right time. And, you folks are making it all that much better. I thank you all for being here. I am still shocked that we had 67 of you signed up for the conference call last Saturday. That is amazing!

Now, back to work! We have undervalued equities to locate!

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