Meet the banker

This fine gentleman is Drew Hicken from Celtic Bank:

(Hi Drew — I promised you'd be on the blog!)

Drew has been a great advocate for us in our successful efforts to get financing. He's been responsive, helpful, and friendly — just the sort of person you want working for the bank that's funding your home. He helped finance the Lucy Avenue house (of Grassroots Modern blogging fame) and has built a nice residential niche in working with modern home owners and builders. (Plus, his hair is longer than Tai's, which bolsters Tai's argument that you CAN be a businessman with long hair.)

Thanks for all the hard work to this point, Drew, and here's a promise for that cost breakdown ASAP.

It's Ours

We're on Lincoln Street (about 950 East) just south of 1300 South.

Schedule

We are to close on our loan on Friday, midday. Once those signatures hit paper, this is roughly what our schedule looks like:

March/April: Design, starting with rough schematics running through final design

late April/May: final design, construction documents, engineering, bidding

May: permitting process begins with Salt Lake City

mid-June: possibility of beginning construction on footings and foundation

late June/early July: permits issued, construction begins in earnest

July through late December: construction

mid-January 2010: Construction loan comes due and we convert to permanent financing and move in...


Oh my...what a year!

Financing

Our loan went for final approval before the loan committee at our bank yesterday. Things went very well and our loan was approved and stamped. We were very excited.

Initially we thought that we would first have to buy the lot with a lot loan and then refinance that loan later into a construction loan once we had plans and a cost breakdown. The bank decided that it would just be easiest to just do a construction loan now with the lot being our first draw on the loan. This should save us a significant amount of money in loan origination fees. We will go in with our equity injection next week and close on the construction loan at the same time that we are closing on the lot.

Since the bank usually doesn't fund construction loans without a cost breakdown we had to back our way into the numbers. The way we have approached this is that we have a certain amount of cash to inject into the project, so if we consider that amount at 20% of the total value, that tells us how much the total project can cost. We don't want a loan greater than 80% and on new construction a bank generally won't lend more than 80% anyway. This is especially true in the current economic climate. Our loan officer has been great and has really been proactive in getting this approved.

The first step was to get us approved for the permanent financing at the end of construction since it would make little sense to build a house and then not qualify to buy the house you just built. An extra challenge for us is that we own the condo we are currently in and we had to qualify for the final loan with our current mortgage payments part of the debt to income ratio. Otherwise we would have had to scramble to either sell or lease our condo before they would close on our permanent financing. Not knowing how the housing market will be 10 months from now, it could have been pretty stress inducing. So, this made it pretty tight on our debt to income ratio, but we did ultimately get qualified. Our condo will most likely be for sale though as we near completion of the house.

Once we were qualified for the permanent we were able to start working on the construction financing. Again, we don't have plans or a cost breakdown yet, but knowing what we are qualified for on the permanent financing lets us back into a number that defines our budget. This number will be our guide as we move towards designing the home. We are okay with this because we have talked with contractors and architects who think our budget is doable, even if it will be tight. With smart planning and a bit of sweat equity we should be able to pull it off.

These charts show roughly how the money is allocated in the budget:

Overall Construction Budget:


Breakdown of Soft Costs:


One thing that helped our loan sail through approval is the neighborhood we will be in. It is close to some really great neighborhoods that have high home values and the initial appraisal showed that we should not have any problems getting a good value on the home for the permanent financing.

So, anyway we have financing in place and we are excited to get moving on the design process.

It's a go

Things have fallen into place this week in ways that we could never have imagined. More details soon!

Q&A

We've been getting a few questions from people who are curious about our plans. Here are some answers.

Q: Is it a tear-down?

A: No. There has never been a home on the lot that we are purchasing. (We actually looked at a couple of tear-down candidates in our property search, but financing a tear-down and new-home build proved to be even trickier than a new construction loan.)

Q: Why build a new house?

A: We actually went back and forth for a while about whether to purchase an older home and remodel versus the hassle of finding land and building something. We settled on the latter for a couple of reasons. The first was the money equation that I laid out above -- we would have spent a lot of money getting an older home to a place where we wanted it, and the second is that we simply wanted something that was truly ours. We want something that reflects our aesthetics, our century (i.e. not cut-up little spaces, crawl-space "basements", etc.) and our personalities. So, after we got through that debate, it made a lot of sense for us to be patient on a land hunt to get what it was that we truly wanted.

Q: Why do you want to stay downtown? / Wouldn't it be easier to build further out?

A: Of course, it would be easier to build further away from downtown. We know several people (including family members) who have done so and are very, very happy with their decisions. We are also happy for them. But it's not for us.

We do our working/eating/shopping downtown. We like the personality of downtown and cities in general. We like living five minutes from our work. Plus, when I moved back to Salt Lake from New York City to marry Tai there was a deal struck — suburbs definitely were not part of that deal.

Q: There are still lots downtown??

A: Yes, but you have to look hard for them and be prepared for some weird dimensions.

Q: Will it cost you more or less than just purchasing a home in your area?

A: What we're doing will end up costing us more per square foot than just purchasing an older home in the neighborhood. We're ok with that, though, because if we were to purchase an older home in that area, we would likely end up doing expensive remodeling — major appliances, roof, plumbing, electrical, structural, reconfiguring floor plan, new kitchen, etc. — that would drastically add to the cost of a pre-built home.

Q: How will your financing work? / How is it different from a conventional house loan?

A: Financing lot and construction loans was always going to be different a bit trickier than a conventional house loan.

Short answer: it takes more up-front money to build than it does to buy a pre-built house, so we sold our old condo, banked the equity from that place and are using it now to build.

Long answer: Several years ago, we were watching a couple blogs about building modern houses in Salt Lake. Tai corresponded with those authors about the mechanics of the process, including financing. Each author recommended that we have something to bank on when we purchased a lot — to one of the authors, that meant having good equity in your current place; to another author, that meant a greater cash down payment. We did the math on refinancing our condo at the time (the original slc202), and realized that it would be too risky for us. By far the safer option would be to sell the condo, bank the equity and then look around for land. That's how slc202 was born. Since then, of course, we remodeled our current place, which we're planning on staying in throughout the building process. And since then, of course, the world economy has also entered the Great Recession/the Good Depression/Global Economy vs. Banana Peel, and financing has become, ahem, less available than it was when those other blogs were building. More than 18 months later, here we are — finally making good on that goal to build.

It has been immensely gratifying to move forward on this process that we started two years ago. It feels so good to be working toward this goal and seeing it actually happen.

The first To Do list

OK, now that we have stopped grinning momentarily, here is a bit more information from Tai about why we extended our contract period:

We have until March 23rd to close on the lot. This is mostly because we are going to be in Australia right in the middle of this thing, but for now, what must happen is:

A) we have to get some kind of written confirmation from Salt Lake City, that this lot is indeed a buildable lot. It currently doesn't conform to zoning requirements for building in the zone, but if at any time during it's existence it did comply, then it is grandfathered in. The seller says she had a building permit before, so it is likely buildable, but we want to confirm.

B) We have to arrange for and get financing for the lot.

C) We have to do some due diligence with an architect and a builder to make sure that what we want to do is feasible within our budget.

Once we determine that the lot is buildable, have financing, and think we can do what we want to do, we will close on the lot.

After we have closed we need to let the lot loan age for 90 days so that we can "refinance" it into a new loan that will cash out the previous lot loan, provide a construction loan and the permanent loan at the end of construction. This works out well because we will need those 90 days to get designs we like, get them bid, make adjustments and get a building permit.

We will have to put 30% down on the lot, and with the refinance into a one-time construction loan, we will need to have 10% of the whole cost in equity, which the 30% would count towards and take care of. We will end up with 20% down, but if we were to try to do the one-time loan from the start, we would have to have 25% of the total, which is just slightly beyond our grasp, so this all works out fine.

Financing has gotten a bit more difficult in the last few months, but rates are definitely good right now. Wish us luck.

Under contract

Aaaaand...we JUST went under contract!

We're going to be a bit cagey with some of the specifics for now (so as to not jinx ourselves!), but we can vaguely tell you that it is an infill lot east of Liberty Park in Salt Lake City. Our contract period is a bit longer than most because we want plenty of time to take care of financing and to determine beyond any doubt that the lot is buildable. If all goes well, we will close on the lot in the second half of March. (Rest assured that when the time is right, you won't be able to shut us up on the details, though.)

We are quite, quite thrilled, more than a little scared, and in awe of the amount of work that this might take.

Breaking news

We will likely be under contract on a lot by Monday, mid-morning. More details soon!

Oh, hi Internet...

Hello again, friends (if you're still reading — and really, I wouldn't be reading after six months of silence).

I wanted to offer a quick accounting of our last several months:

June: work
July: work
August: work
September: WORKWORKWORKWORKWORK!!!!!
October: WORKWORKWORK
November: WORK
December (so far): WORK

As you can see, it's really been a blast.

We haven't moved on anything house-wise during this time either, but that has less to do with the work schedule and a lot more to do with the general state of the world economy and all that frightening business. (We'd prefer to not jump in too soon or rashly — I'd like to avoid becoming a cautionary tale.)

I will say that we have been stalking a particular lot basically since July, and by stalking, yes, I mean it all: imagining what we would look like together at parties, signing my last name with its address in my diary, picking out outfits for it, driving past at all hours of the day and night, stopping by all the shops in the neighborhood, and so on.

We actually went through a round of negotiations with the owner of this lot about two months ago but we couldn't reach a comfortable price for everyone. In the meantime, Tai has designed about eight iterations of the "outfit" we could put on that lot, and we have watched the price slowly — so slowly — edge downward. We'll keep stalking it through the next couple of months, and who knows? Maybe we'll be able to report on some action sooner rather than later. Keep your fingers crossed for us.

Plotting

With all this great weather lately, we have some serious yard envy.

We are currently looking at two lots, both in the general 9th-and-9th/Liberty Park areas. We're hopeful that we'll be able to get something soon, but in the meantime the posting will be light because we're just enjoying the completed condo and looking around for land.

Decision

It's been a while since we've updated. Sadly, the silence is mostly an indication of us not doing much on the home front. We've been insanely busy with work, but occasionally we have a moment to ponder how little we want to stay in this current condo long term!

With that in mind, we've made a bit of a decision. We're no longer eyeing lots in any type of historic preservation district, which includes our current neighborhood. It hit me one afternoon that I didn't want a board of strangers telling us what we could or could not do with a particular piece of property.* There are fewer things that make me grumpier faster than thinking about the Historic Landmarks Commission.

* And yes, I know that this grouchy libertarian rant doesn't take into account all the good things that zoning has brought this world, nor the positive achievements of cities — and Salt Lake City, in particular — such as the roads I drive, the power lines I use, the water lines that slake my thirst, et cetera, et cetera.

That's the short story.

The medium story is that I called a SLC planning employee to ask about a particular, reasonably-priced property in our neighborhood. This piece of property has a nearly condemned home on it, making it — so I thought — a ripe candidate for a tear-down. The planner stated in no uncertain terms that she would never try to tear down a building in a historic preservation district. She almost laughed when I pointed out that the building wasn't a contributing structure, that it was in really bad shape, hadn't been occupied, was nearing the point when you can call the city to request that it board up the home, etc. Evidently, even the planners in the city recognize that the HLC doesn't play that way.

The HLC has absolute power over tear-downs in historic preservation districts. In order to tear down anything in that district, you must prove economic hardship, which is a subjective term with jurisdiction for that decision residing solely with the HLC. In short, the HLC does not want you to tear down anything in a preservation district.

With the rest of what we've heard about the HLC, the variances that they would have to approve in order for us to build on any lot in this area, and the grumpiness I feel about these guys in general, something clicked. I just didn't want to deal with it any more. I didn't want to have to pep talk myself into the fight it would take to build modern in this area. I love this neighborhood, but...my love has its limits.

So, wherever you are, nameless planner in the depths of the City-County building, this post goes out to you. Thanks for setting me right. We're now looking at neighborhoods near Liberty Park, just south of downtown, safely outside Salt Lake's historic preservation zones and near a couple of streets where a few other modern homes have popped up in the last year or so.

Oh, and I promise to hound Tai to show you all what he's done with the fireplace, book shelf, and mantle.

Selling point

Strangest thing they left behind:


We're totally keeping it.

Surprise!

Tai walked into work today to find a fax sitting on his desk announcing that the former owners of our future house are vacating by midnight Saturday. That gives us possession more than a week earlier than we expected, and we are suddenly feeling that this whole remodeling thing just got quite a bit more real.

Close

We closed yesterday on the Center Street condo loans. We get possession of this cat paradise Sept. 24. First thing out? The carpet. Maybe even that very night...

Kitchen

So, the kitchen for the place we are buying needs a little work. And by a little work, I mean that it needs to be ripped out.

The layout is not that great and it is, well, ugly. It feels so cramped and chopped up as it currently is. Here are a couple of photos of the kitchen now.




So, what we want to do is open up the kitchen a little bit. This is a hard task because it is a small space, but we want to take out the island and wrap the kitchen in an L around the wall. We will lose a little bit of the dining area to do so, but I would rather have a more comfortable place to cook and in a 950 square foot condo, you probably don't need a gigantic dining room.

Here are some renderings of what we would like to do using the Ikea cabinets that Kersten mentioned earlier in the blog.




The tile back splash in the rendering isn't exactly what we want to do, but it was the only texture option I had in my rendering program. We would likely do something like this:

You know you're (a) ______________ when...

...this gets your body temp up:


From here, if you're really interested: "The DITRA mat combines the functions of waterproofing, uncoupling and vapour equalisation with good bonding performance and direct load transfer into the substrate. It is therefore an ideal installation aid on critical substrates both indoors and out."

(It's a sub-layer for tile.)

Help us fill in the blank.

IKEA

The day after we went under contract on the Center Street condo, we took ourselves waaaaay south to the one and only tourist attraction in Draper, Utah:

I felt like I was going to Costco — a gianter, bluer, particle-boarded Costco. Ah, but how could I not love Ikea? I furnished one-half of a very ghetto Manhattan Chinatown room entirely with the cheapest furnishings Ikea had to offer. (My design sensibility for that particular shopping trip, which was just before I started my second semester of grad school funded entirely by student loans, consisted of how much does it cost?, and, do they have it in stock?) I did a bit of work looking into the deal that Draper, Utah, set up with the retailer in order to lure it and all its sales-tax glory to within city limits. And I watched for months as the crews poured one impossibly large concrete slab after another, coated the exterior with what must have been millions of gallons of blue paint, and expanded the adjacent frontage road all in preparation for the onslaught of grateful, budget-minded clients.

This particular trip was to scout Ikea's kitchen cabinets, the praises of which many, many other reviewers have sung before — here, here and here. In all, it was a pretty successful trip, minus the labyrinth of double-wide baby strollers, two brief power outages inside (no riot — good job, Utah!), and infant-themed bulk justification banners.

Generally, I can't complain about Ikea's philosophy — decent design at ridiculously low prices — but some/most of their stuff ends up looking cheap. Our conclusion was to avoid any cabinet touted as an "effect" of one wood or another. The "effect" is a laminate surface with similarly colored plastic tape along the edges of the cabinets. Looks. Cheap. Really. Really. Cheap. But you know what? It is cheap, so I guess that's OK.
I think that we're going to opt for something in the "abstrakt" line of cabinets — possibly a red, possibly a white. We might throw in some frosted glass with metal frames. We're not really sure because the kitchen in the condo is pretty tight. But we're not crazy about the idea of passing off something as wood that isn't wood, so we will studiously avoid all "effect" products.

The process

Perhaps you've noticed a bit of recent buying and selling activity documented on this blog. We do have a plan to all this madness, moving, in-laws' houses and storage units.

While we dearly loved the original slc202 condo, we wanted eventually to live in a house. Preferably a modern house of our own building. With land prices being what they are in these parts, we knew that we couldn't afford a lot without using the equity in our condo. We also didn't want to find the perfect lot and still have to sell our condo, perhaps for a lower price than we knew it could fetch with a little extra time. Thus, the logical first step to us was to sell the condo, then stash away the equity from the sale, and finally make our next move.

In the interim, however, we didn't want to pay rent. That's where the Center Street condo comes into the picture. We're hoping to renovate and live in this new condo while we look around for a great lot and start the house building process. The Center Street condo appeals to us because it's in the neighborhood in which we hope to eventually build — west Capitol Hill, also rechristened the "Marmalade District" by Rick Howa's mixed-use development on 300 West and 500 North.

Our immediate future holds a few months of renovation and snooping around for lots in that neighborhood, or any of the other great nooks Salt Lake City has to offer. We hope our long-term future will include a smallish, green, modern home near downtown. So buckle up and stay tuned.

Buying

In other purchasing news, we are under contract for a condo on Center Street in the West Capitol Hill neighborhood just north of Salt Lake's downtown. It's at approximately 480 North and 150 West. Wish us luck!