Live/Work

I spent a “little” time in Sketchup building my house. The video below shows the structure, as well as the new vaulted ceiling section in the living room.

House Animation

I wanted to give a brief shout-out to the local engineering firm Madden and Baughman.

Tom Baughman worked with our architects at Communitecture to come up with some great solutions for the original 2-story roof plan. He’s also helping me with my little vaulted ceiling project.

Here’s an image from their website. I encourage folks to take a look. The site is modest, but nice for a bunch of left-brainers:

(To see the web design landscape for engineering firms, check out a few of the links on Google. Ouch! Fortunately, Tom and his crew seem to understand how to use good design to promote their business. Not too surprising given the elegance of many of their structural solutions).

While I wait for…well, something to happen with the ADU project, I’m considering tearing a big ol’ hole in my living room. Call it remodeling or therapy, I think it will be a great way to get dirty and feel like I’ve accomplished something.

I was inspired by an article in Fine Homebuilding that showed how one could take a tradiional ranch style roof, vault the ceiling, and buy some great “free” space.

“Free” is relative, of course. I’m sure I’ll spend a lot more than I expect. Nevertheless, it’s an attainable project. Probably foolish to start it in December, but I’m an optimist - the cold will inspire me to finish it quickly!

Here’s the issue of Fine Homebuilding (Jan 2008) with a detailed article. You can order back issues from their website.

I’ll follow up with my Sketchup file illustrating how this works from a structural perspective.

I’m looking at an option of building the project in phases: a simple, single story unit designed to be added on at a later date (hence the wacky roofline). If you look closely, you’ll see it’s the same building, but with a simple, nearly flat roof. We’d tear this off later, then use the flat roof joists below for the floor of the second story.

North Elevation

East Elevation

Looks like I was quoted in this month’s Oregon Business Magazine. A Brief article on the merits of live/work spaces. It’s a short piece, and mostly about the concept, rather than specifics.

Left hook from the economy. Right cross from the banks. Multiple uppercuts from the mortgage industry. A 10-round knockout.

For those of you who’ve been following along, it’s been a real treat sharing this process over the last year and a half. As of today, I’m officially abandoning the live/work project. putting things on hold while I look at all options. The climate is wrong, the banks aren’t willing to meet us halfway, and the entire process is…well, just exhausting. I could go on and on about things I’d do differently, frustrations with the industry, or the unrealistic expectation the city has for the ADU program.

But for now, I won’t. Instead, I’ll just say thanks to those who deserve it.

Bad news. After reaching terms with the bank, they’ve gone back on their initial commitment. The first terms were not favorable, but if I held my nose, I could tolerate it.

The new terms are just abysmal. They’ve increased their fees to 2 points, are requiring all sorts of new documentation from the builder, and want to up our rate from 6.5% to 8%. All this and they hold the lien on the house - if anything goes wrong, we lose everything.

After some consideration, I made the decision to stop pursuing business with this bank. This was a tough call because we don’t really have any other options. As much as I wanted to make this project happen, it just didn’t make any sense. Here’s why:

Our project costs roughly $165,000 to build. Our current home is worth just over $250,000. In order to loan on the construction phase, the bank requires that that hold first position on the property. This means that they want to buy out the existing mortgage (to protect themselves in case of default) before loaning on the new building. So while it would SEEM like we need to borrow $165,000, when you add in the existing mortgage, interest reserves, bank fees, title, so on and so forth….you get to a “loan” of $447,000.

Since the appraisal of both properties came in at $485,000, the most the bank will loan is $364,000 (75% of the appraised value of the property). The difference between this amount ($364k) and the TOTAL project cost ($447k) is what we, the owners, have to come up with in CASH (just over $80,000).

I don’t know about you, but it’s a little CRAZY to come up with $80,000 in order to get a loan for a project that’s $165,000.

Still, I was willing to give it a shot. I don’t have that kind of scratch lying around, but I do have some savings. Plus, I have a business with a substantial line of credit and some cash reserves. Last, but not least, I had a dear friend who was willing to loan me $30,000 to make up the rest.

It was a stretch, but I could have done it and met the bank’s insane demands. When they changed the terms, it was still possible…

But the reality is what the bank was asking was just too much, and for a cost that was disproportiante to the risk they were willing to take. Calling the current lending climate “unfriendly” would be an understatement at best. It’s a stark example of how the credit crunch is grinding our economy to a halt.

Well, it feels almost surreal, but the city has our permit ready. Meaning, if I put down my money, we could break ground. Of course, this is all theoretical, since the bank is behaving like…well, most banks. More on that shortly.

Received a new appraisal yesterday. It’s better, but still short of what we needed to complete the project. For those of you who are unfamiliar with the lending process, here’s how it works:

Banks will loan you a certain amount of money based on the appraised value of your project. To keep it simple, let’s say your project appraises at $100,000. Most banks lend between 70-80% of the full value of the project. With the example above, that would be $70-$80k.

This percentage is often referred to as “Loan to Value” or LTV. Read the rest of this entry »

Well, tomorrow is THE DAY. The bank’s appraiser will be coming by the house to do a walk-through. This will be the second appraisal of the current home and Live/Work Propoert. The number we need to hit is ambitious, BUT the new appraiser agrees that it’s valid to use duplexes as comparables.

The reason duplexes are relevant is that there are many examples of such properties around the city. Unlike ADUs, duplexes can be found throughout many neighborhoods, and finding recent sales data will be much easier.

If you’re reading this post, send some good wishes our way.