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On July 15 of 2008, homebuilder Mike Roberts, of Scottsdale, Ariz., thought it was all over. I got tired of fighting, he told me during a phone interview last week. Roberts successful homebuilding business had collapsed under the weight of too many loans and canceled purchase agreements. Roberts stuck the barrel of a pistol into his mouth and was about to pull the trigger, when the phone rang and startled him. The message machine picked up the call and a voice filled the room. It was not an angel. It was a creditor, anonymously threatening to kill Roberts if he didnt pay up. The irony of a death threat interrupting a suicide, snapped Roberts out of making a very bad decision. He put the gun down and wrote a book instead, Broke But Not Broken, detailing one builders fall from a net worth of $46-million to flat broke in 18 months.

I read this book a few years ago. Its part confessional, part business reality-check, and while not the best written, certainly one the most heartfelt and honest accounts in the archives of the Great Recession. Its also the only book about the recession written by a homebuilder, despite the thousands of us that were deeply affected.

For the backstory leading up to that fateful moment when Roberts chose life, I recommend reading the paperback. Its a quick, breezy book that captures one of the darkest times in homebuilding history. The book even hints at a happy ending, although it never quite gets there. In real life, things dont always wrap up so quickly and neatly. Nevertheless, its been about five years, and wondering whatever happened to Roberts, I contacted him and asked if hed share with Fine Homebuilding the rest of the story.



A Slow, but Happy Ending

When I spoke with Roberts, he was busy working at his on-site sales office in Scottsdale, Ariz., where his new company has just completed and sold 24 homes, with another 18 under construction. Roberts has two developments underway, which at build-out will add 448 more homes to his already considerable resume. Homebuilding is rebounding, he told me. And so is Roberts, who describes himself as a builder of homes, companies, families, and dreams. A man focused on the future, not the past, he says.

Yet it was the past we kept talking about. When I asked him how he managed to get another loan, after defaulting on so many, he told me, The lenders hoped I learned from my experience. They know I built 2000 homes. They know that I know what Im doing. I lost 94 million in bank loans, 12 million in private funds, and yet they looked at the new me.

The new Roberts is no less ambitious than the old, but a lot less ostentatious.  In his heyday, Roberts flew his own jet and routinely dropped $500 or more for dinner. I eat at Olive Garden now, not at Ruth Chris, he said, And I pay more attention to the right-hand column of the menu, where the prices are. My aspirations for luxury and opulence are gone.

Roberts approach to business also changed, I am more conservative with my business model. I no longer hope that the numbers work out, I make sure they work out. I used to do financial models based on what-ifs, now its based on what is. When I cost out a home, I build it only if I know I can make 16% today. My projections no longer include a line item for future appreciation.

When I asked Roberts if hed give himself a raise once the dollars started rolling in again, he answered, No. Ill give my retirement fund a raise. I like my life now, and I wont sacrifice myself again. Money changes people. Its evil, and I wont live like a king again. The fall was much too hard.

I asked Roberts if he felt guilty, given the loan defaults and unpaid subcontractors, and he replied stoically, There was no way to avoid it, he said. The recession was like a black hole, he explained, and once in the vortex, there was nothing he could do to avoid getting sucked in. All the awful financial rumors came true abruptly, like an avalanche, all my buyers dropped out. Imagine 160 People left behind their deposits! 

Guilt--no guilt. I paid every employee, and this was critical for me. The banks cut off the funding. I didnt benefit from any of it. The constant attacks lead to my becoming suicidal, not guilt. I had an IRS investigation, a bankruptcy audit, forensic audits, people wanted me in jail. For two years I was under investigation, but Id done nothing wrong--sometimes things just go wrong. My frustration was that people were losing more money on Wall Street but nobody was going after those folks, they went after the homebuilder instead.


Lessons Learned

So I asked Roberts what, if anything, he would do differently. I had a nice comfortable growth at one point, and I got greedy, he told me, I got too aggressive and started to accept investor money. Today, Roberts wont take anyones personal savings to invest in a project--even if you insist. He only uses his own money and conventional financing.  I lost $94 million in bank loans, and only $12 million in private funds, but those $12 million became the most damaging part. When you lose somebodys life saving, youre the bad guy.

Roberts sums up the lessons he learned, and how he applies them to his new business in a few simple rules of self-discipline:

And make sure the numbers work. If they dont, dont build.

My life is good, now, Roberts told me, Its simple, and I no longer wonder if I can make it, I know I can. I owe less than $100.00, and thats real wealth. Someday Roberts plans to write another book detailing the comeback. But for now, hes too busy building homes and a bright future.   

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