Herman and His Bed & Breakfast

EDITORIAL - by JIM ALBERT - Monday, July 27, 2009 - Herman is an Ironwood resident. He lives in a very large house, much too large for his own needs. Forty years ago, he decided to suppliment his rather meager income by turning his house into a bed and breakfast. For years, his new "at home" business thrived. The more money Herman made on his bed and breakfast, the more money he invested back into his house. Things began to change, however, as the local economy started to decline.

Fewer and fewer people rented his rooms. New motels in the area were also having in impact on his occupancy. Tourism steadily declined, and Herman really struggled to stay afloat. The steady stream of "improvement" money that brought Herman's house back to it's original grandeur quickly dried up. Not only was Herman unable to improve his property, he was struggling to even maintain it.

Last year, things seemed to hit rock bottom. His once thriving B&B business was now struggling to survive. Herman's house, once meticulouslly maintained and a real showplace, was now a run-down shack that nobody would ever consider staying at. Paint was peeling; windows were loose and drafty; doors throughout the home were warped and very difficult to properly shut.

Herman decided it was time to seek financial help. He went over to his local bank and applied for a home improvement loan. His loan officer "skimmed" his application and said, "Herman, how about we set up an appointment so that I can see your house. I'd like to know what the bank would be sinking its money into."

Herman agreed and an appointment to view the house was made for 8:00 the following morning. When the loan officer arrived at Herman's house, Herman was outside ready to greet him. "Hello, Herman!" the banker said, "How are you today?"

"Fine!" Herman grunted to the banker.

The loan officer inspected the house, the grounds, and the surrounding neighborhood. When he was finished, he and Herman sat at the kitchen table to discuss the loan.

"Herman," said the loan officer, "I can tell this house was once a beautiful mansion, but you've let the place go! Paint is peeling on the trim. The siding is faded and in need of repair. The roof is ready to be replaced. Your walkway and driveway are being overtaken with weeds and tall grass. Your windows need caulking and the house can use a serious overall cleaning."

"Well," Herman said, "Business has been nearly non-existent the past few months!"

"You know Herman," said the banker, "The bank needs to keep in mind that you could possibly default on a loan and we'd be out the money we lent you. If the house were in better repair, and you didn't have all the blighted houses around you, the value of your property would be sufficient enough for the bank to consider the loan."

"I see!" said Herman.

"At this time, Herman, we can't lend you any money." said the officer,"I see on your loan application that you have $5,000 in savings and another $10,000 invested in bonds. Is that correct?"

"Yes sir!" said Herman.

"I'll tell you what, I will keep this application and loan consideration open for 60 days. In two months, I will come back and re-examine your house. What I want you to do in the next eight weeks is to spruce up your house as best you can to make me believe that you are serious about fixing up your property and that you are capable to making good business decisions. Is that fair enough?"

"Sounds good, sir!" Herman uttered.

"And to make things easy for you Herman," the banker explained,"I will make a quick list of things you can do to improve your property. Now, let's see: (1) the paint is badly peeling on your house trim; (2) the siding needs to be cleaned; (3) you need to do some yard work; (4) the rooms could use paint; (5) the chimney could be repointed; and (6) flowers and shrubs would add real curb appeal to your house. Herman, if you can show a significant improvement in the next eight weeks, we will not only lend you enough money to reopen your bed and breakfast -- we might even be able to lend you enough money to buy and tear down the run-down, eye-sore tax-sale house next to you. Minor improvements will make your business more appealing to your customers! So that's the deal, Herman. How's that sound?"

"Great!" said Herman, "I can hardly wait to get started."

After two weeks passed, the banker returned. After inspecting Herman's house, he met with Herman on his front porch.

"Herman!" the banker barked, "What have you done? You haven't painted! The siding is still in disrepair! I don't see any flowers or shubs, and you haven't even mowed the lawn since I was here last. Don't you want the bank to help you?"

"Sure I do!" said Herman, "Of course I do! Didn't you say that the house next to me was an eye-sore?"

"Yeah!" said the banker in a worried voice.

"Well take a look! I spent my $15,000 tearing it down!"

"You bought that house?" asked the loan officer.

"Hell no!" replied Herman, "I just paid to have it torn down! It's up for tax sale! It probably won't sell at the first auction, but I'll bet somebody will pick it up for next to nothing at the second. You said it was an eye-sore, and you said if I showed you significant improvement that you'd lend me money on my house! So how about it... I could use about $100,000 or so!"

Of course this story isn't true. There is no Herman and he doesn't own a bed and breakfast. And when you think about it, who would be foolish enough to spend all of their hard earned savings tearing down the house next door while doing nothing to improve their own house. And who would be stupid enough to think that tearing down a building they don't even own would "wow" a potential lender into giving them a loan? The only "wow" Herman got from his lender in this story is, "WOW! Herman... you're a freakin' idiot!"

As I said before, Ironwood doesn't have a Herman with a B&B -- but we do have a George with a DIDA! I think I'll call him. I'm sure he'll get a kick out of this ridiculous story!