He has been modeling those same ideals to our children from the time they were born, and to watch him teach them to value people, to look them in the eye and say “Thank you” and “Hello,” is wonderful for me. Chip just automatically does these sorts of basic things that a lot of us overlook and don’t realize make a difference.
When I was in my twenties, I thought I’d grow up to be the most liberal parent in the world, but I’ve actually turned out to be pretty strict and old-fashioned. I’m teaching the kids to always say, “Yes, sir” and “No, sir,” and I don’t want them playing video games or sitting around doing nothing all day.
I’m right there with him. If these kids want to play, I want them to use their minds and their hands and to go outside.
It’s funny how Chip can be so liberal on one hand and so conservative on the other, though. He really is unpredictable. I saw it from the very beginning, and I learned again and again that I simply could not put this man in a box. Just as soon as I would get in the rhythm of some preconceived expectation I thought he fit into, he would turn on a dime and do something completely unpredictable. Then I would have to readjust and recalculate until I finally realized there are just no stereotypes that fit Chip Gaines.
It wasn’t too long after our adventure with Cedric that Chip came home with an even bigger surprise: he’d found a couple who wanted to buy our Castle Heights house, so he’d gone out and bought us a new house to move into and flip.
“What?” I said. “Chip, I love this house.”
“You were just saying this house isn’t good for the kids.”
“I know, but we can change that. I mean, Chip—this isn’t just another house. This is a forever house.”
“Jo, this was never meant to be our forever house. We’re not ready for our forever house. This isn’t everything for us. It isn’t everything we want. This is a flip house. It’s a big flip house. It’s a nice flip house. But it’s still a flip house. We knew that going into it.”
When Chip drove me over to see the new house, I didn’t say a word in the car. I was mentally and emotionally preparing myself so I wouldn’t lose it. It was a long, gray, one-story, shotgun of a house that had been built in the go-go-blandness of the 1980s. It had no character. It had no charm. It had no style. It was in a great little pocket neighborhood called Carriage Square, but it sat on a smaller lot than the rest of the houses there, and it backed right up to another family’s chain-link fence without so much as a sliver of a backyard. It had a tiny little sloping front yard, too, that ran right into the street. Nothing stately. Nothing old. Nothing beautiful.
I hated it.
Of course, you have to remember that Jo pretty much hated every new flip house we moved into when she first laid eyes on it. I think this one just stung a lot more because we were coming from such a gorgeous old home.
Maybe we had stayed there a little too long. It had been years by the time this all unfolded. We were getting comfortable in that house. And I’ve gotta say, I don’t like it when things get too comfortable.
To me, it’s a motivation thing. Comfort is what you do when you retire, so if there’s any way you can keep pushing off that “I’m completely comfortable” idea, then it keeps you a little wily; it keeps you young; it keeps you hungry.
It’s kind of Rocky-esque. In those movies, Rocky Balboa had all the hunger and desire when he was starting out. It wasn’t until after he had the money and the car and the house and the wife and the kid and the dog that something happened and he lost that fire.
For me, I’ve always thought of moving as a part of that motivation. Houses to me are just investments—inventory, if you will. That’s it. So if we’ve got the money to live in the house that we’re in, well then, great. But whenever things get tight, then it immediately comes back to “Hey, this is just an investment.” It’s like the car dealer who drives the BMW for a couple of weeks knowing if all hell breaks loose, he’ll sell the car. Because, again, it’s just inventory.
Once we settled into the Castle Heights house, I think we both started to settle into a groove. The business was rocking and rolling, and so we started to think, We’ve made it. We’re here. Let’s just put everything on autopilot.
But here’s something I’ve noticed. Whenever you do that, whenever you’re all settled in and think that’s it—that’s when the big blow comes that knocks you back down to square one.
That hadn’t happened . . . yet. In fact, Waco was pretty steady. We didn’t experience the tsunami of economic slowdown that the rest of the country experienced after the housing market collapse in 2008. As we rolled into 2010 and even 2011, the effects of that were just starting to make their way into the Waco economy.
Even that didn’t affect us personally, not right off the bat. But I could already see that it was taking us a little longer to move flip properties. Rental income dropped a little bit too. It was just these little incremental things. I wanted to make sure we hedged against that, and the best way I knew how to do that was to sell our current house, take that equity, and downsize a bit. Then we could coast a while if our new home sales or our flip properties took a little longer to sell.
There was another motivating factor to move quickly, too, on top of the fact that I just thought it was time to break out of our comfort cycle and maybe kick our lives into second gear again. In early 2011, we started up a big new investment project. We’d decided to go ahead and develop a tract of land not far from that new shotgun house. It was land that we’d invested in with some of the money we’d made back when my dad and I sold most of our eleven acres on Third Street.
The reason my dad and I had never developed the eleven acres ourselves was that we had lacked the basic knowledge we needed to get it done. Back then we’d been guessing at everything, figuring out where to put streets and curbs and how to get permits.
At one point we thought we could put forty houses on that land. And that was important, because there’s tremendous economy of scale when you do a project that big. You can buy all of your lumber and concrete and everything in bulk, which lifts your profit margins in a big way. But we couldn’t make the forty houses work. We found out that the bank was only going to lend us enough money to build eight units. Eight! That just wasn’t enough.
So we kept messing around with it, and the most we could get financing for was twelve units. That still didn’t make economic sense. So we sold the land on Third Street, keeping a little bit of it by the road to put our twelve houses on. And the big developers we sold the land to, who actually knew what they were doing and had the financing, came in and put more than fifty units of student housing on that back parcel of property alone.
We’d struggled to figure out how to get forty units on the entire tract, including the front piece that we’d ended up keeping. They were just better at it than we were, and I learned a ton just by watching that project come together. I knew they were going to make millions of dollars on that deal. So as excited as I was to make hundreds of thousands, I promised myself that one day I’d be doing deals like theirs.
Now, all those years later, I was smarter than I’d been back then. I had more pull with the banks, I had a bigger crew, and I knew people who could draw up the plans and help get the permits through the city. So we got that whole process started, and I knew that it was going to take a lot of money up front to get it done.
That just served as yet another incentive for us to move into the Carriage Square house. Living in that smaller place would cut our mortgage payment in half.