Here’s the latest! When we first closed the loan, I was hustling to get the HPR filed until the builder said he waits until later in the project, sometimes even after it’s built, all the time. For a while we weren’t sure exactly where driveways would go and that information is needed on the HPR site plan. We also weren’t sure where utilities would run in the yard which can sometimes require documentation as a shared element of the HPR. It was around this time as well that we ran into building envelope issues. I guess our original surveyor didn’t know that the covered porch had to be included in setbacks. After we scootched the house plans back on the lot, the back of the building was violating the rear setbacks. I made the judgement call to make the front porch uncovered so that we could move the house closer to the street without going through a dramatic variance process. We’ll save some money on framing and roofing costs but not much.
While we were discussing HPR stuff, shawn’s team was getting going on pulling permits. I think they did that early January as there was some back and forth prior. His site work guy got out there with equipment pretty quick (photos are in that album) while we scheduled Superior Walls. This is a foundation company that shawn really encouraged using as we don’t have to worry about water leaking into the basement… ever. It was more expensive than block, but by the time you figure in some of the savings it has like not needing to pour big elaborate footings, it wasn’t even that much more expensive for a far “superior” product. I believe this is being installed as we speak. Once this is up construction moves quicker as it’s all shawn’s team rather than waiting on a 3rd party that needs to be scheduled out 3 weeks.
All in all, it feels to me like for the first time we have some momentum and things are going in our favor. It hurts to pay $24k for 4 water and 4 sewer taps but we knew that going in. We had a fair amount of cost overruns at the beginning but it’s leveling off finally. Also, lumber is coming back down some but is still aggravatingly expensive.
I am leaning heavily towards selling two of the units as I think we can put this cash to better work elsewhere AND if we do it right, we may be able to make arrangements with the bank that we don’t have to pay as much principle back, thus leaving us with a low cash position in the property. New build homes around the size of these are selling for $200k all day around town. The finishes are slightly nicer but honestly there’s not a huge gap there. Plus we have a 2 car garage and nobody is building that. Also, HPR homes are a kind of new thing in this town, so folks may perceive less value.
So at most what we are building is worth $800k (whoa) but most likely more like, say, $700k. At a loan of $440k, we have a pretty terrible 61% LTV. So I’m hoping for a scenario where we sell a couple and the bank lets us move to 75-80% on the remaining 2 units. It’s mostly all hear-say for now. Also, I can push out the 2 units for rent before the homes are built and see how hard it is to get $1350/mo or more. If it’s a stretch to get good rents, we might as well sell all 4 units.
We’ll see how the adventure unfolds, but I think we have some decent options.
