Live/Work

Well, a little over a year ago I embarked on this project. At the time, I had great expectations and dreams about building in the fall of 2007. Oh boy! Talk about a reality check. Here’s a few things I’ve learned as a result of the last year:

• The design process is important, expensive, and lengthy. As a designer, I’m well aware of some of these realities, but it’s tough when you are on the other side of the table.
• The Land Use Review process is to be avoided if at all possible, unless time is of no concern. While the city has a set time-period for the process, it will invariably go longer if there is any resistance to your project. The corollary to this reality is that it’s critical to make friends with your neighbors if you’re going for an adjustment.
• Financing is an elusive creature. When we started our project, the mortgage market was “full speed ahead.” However, in the last year, reality came crashing down. The Sub prime mess was the tip of the iceberg. Several lenders I was working with went out of business. Loans are tightening and cash is harder to come by. I’m still hopeful, but this aspect of the project would have been much less problematic had the design process taken less time.
• Be wary of “ballpark” figures from builders. I spent a considerable amount of time and energy working with a builder who, ultimately, ended up being a complete disappointment. He initially “ballparked” the cost at around $120k. His “final” estimate came in at $160k. After reviewing it with him in detail, and pointing out MANY holes, I was gifted with a new estimate of $180k. After reviewing this next estimate, I realized there were still additional holes (like no kitchen cabinets) which amounted to $20-$40k. In other words, his original estimate was nearly $100,000 lower than his final number. This is not only annoying, but has real consequences: because I went to funders with the $120k number, my appraisal came in too low for what will be the true cost of building the property (it’s a dirty little secret in the mortgage industry: appraisers “adjust” their appraisals to meet the needs to the mortgage broker, within reason). Now I’m stuck with a mostly worthless appraisal ($650 down the drain) and back to the drawing board with funding.
• Alternative projects are inherently more difficult to build and finance. Builders look at our project and price it like a house. Lenders look at the project and can’t see the value of a second living space on a lot. It’s neither a house nor an “addition.” Appraisers look at the project, complain that there are no “comps,” and write appraisals that undervalue the building. I’m guessing that banks will look at this project, scratch their heads and say, “too risky.”
• Be prepared to keep hammering away at obstacles. In this process I’ve learned that most folks will encourage you to take the path of least resistance….that is, the path that provides THEM with the least resistance. City planners will question your motives to build outside the code. Builders will push you to use materials and processes that they are familiar with. Utilities will want you to run their lines in a manner that suits them best. Neighbors oppose change in general….so on and so forth. Anyway, I’ve found the best way to handle the constant barrage of “nos” is to simply keep going forward. Ultimately, you WILL get what you want, but it might take some time and compromise.

This entry was posted Saturday, January 5th, 2008 at 9:43 pm and is filed under Uncategorized. You can leave a response, or trackback from your own site.