Still working it out – cashless in Seattle…

I’ll start out by offering my apologies as it has been far too long since I have updated. I was caught off guard by how many of you are paying attention! I guess that is the life of a blogger – lol. It is exciting to have so many of you ask what is going on with the house, and I appreciate your interest and moral support since this is not as much fun as thought it would be. I know it will be fun at some point, but right now, it’s just annoying.

So what is happening you ask? As far as any “groundbreaking”, i.e. roofs coming off, editions being built, kitchens being designed, finishes being chosen or walls being demolished, the answer is absolutely nothing… So if you are in this blog for those highlights, I suggest you stop reading now (Bob Anderson). We are STILL figuring out how to make all of this work. I hope this doesn’t bore you all, but here it goes…

As you know from my last update (or if not, just to recap), the lot is large, but not quite large enough to subdivide as it stands now. We need two feet from the neighbors lot in order to make the lot large enough to subdivide. When we have that settled, we intended to sell off the back lot (our house sits on the front of the property), which would pay for our entire remodel. Sounds easy enough, right? Well, it did to us too, and with the assistance of the builder and our designer, we set those wheels in motion.
But one thing that you have to keep in mind and what complicates things is that we have no money at this point. We now have two mortgages and a home equity loan, so all our cash is gone and we have nothing to offer the neighbor. Builder says he can manage that aspect of it. But did he hear us? We have no money. Seriously, we have no money. So, builder approached neighbor and negotiated with them to sell two feet to us. Great, and after we picked ourselves up off the ground and recussitated ourselves from the shock of the price they want for the two feet, we asked who was going to pay them. Did mention we have no money? Well, builder has a possible solution for that. He has a buyer for the back lot, and in order to be in on this deal that could make her a lot of money as well, she may consider putting up the money for the neighbor. Hmmm, nice lady. Okay, so how does all this go down? Contract has to be drawn up for the purchase of the two feet from the neighbors. We have to give them some earnest money. Wait, let’s clarify, we have no cash. First obstacle. Next, somehow the lady (going forward known as BLL – back lot lady) has to get involved in the contract as she may be paying the neighbor. Second obstacle. Then lot has to be re-surveyed and sub divided. Lots of paperwork, and negotiating with the city. In addition, we have to go back to US Bank and renegotiate our mortgage
because once we divide the lot, the property that we originally purchased does not exist anymore and may not be worth as much as we are mortgaged. And if you read what we went through with US Bank to even buy this property, you can understand why we wouldn’t want to do that. Third obstacle. Neighbor selling the two feet also has to refinance their mortgage as their property is not what it was originally – 2 feet less. Lawyers, banks, taxes for them. Fourth obstacle. Now builder starts to outline more costs associated with dividing the lot. Sidewalks have to go in, city fees, his fees have gone up for handling all this, and we’re going to need to come up with some money to pay him to do all this even
though BLL is elegedly paying the neighbor. I’m not sure if I mentioned, but we have NO MONEY, so now the subject of us getting a construction loan comes up. We had never even entertained that idea since we would have the money from the back lot, but now it looked like we were going to have to investigate that. Fifth obstacle. And as all this is going on, the builder sends us a letter of intent that he wants us to sign so he can be assured we will work with him. Seriously? Okay, now these aren’t obstacles anymore, these are red flags. This is so complicated and complex that at this point, Bill and have a major reality check. We feel a bit like we have depended soley on the builder to lead us through this process so far. That’s why the letter of intent was so surprising. We have no “intention” of working with anyone else, and it was hard to understand why he needed us to sign such a document. We have been nothing but loyal to him and probably a bit too loyal when it comes down to it. I do get it though, he’s just covering his end of it and making sure we don’t flake out on him, but seemed so out of place. Anyway, his letter of intent had the opposite effect. We decided we needed our own team to review things from our end. Hired a lawyer, tax accountant and reconnected with the real estate agent we used to buy the property. We also considered if we needed to be looking at other builders. Taking matters into our own hands. We also started inquiring at banks to see if we could get a construction loan. Ugh. We also had a chat with our designer who is the most awesome guy. He has worked with this builder for years and assured us he’s the guy we want to be working with. We expressed to him some of our frustration. Mainly with the extremely complicated nature of this transaction of dividing the lot, but also a bit with the communication and the lack of understanding by the builder of our financial situation.
The steps required to divide the lot are all balls we’re juggling, but have to come down and tasks need to get completed in some sequence that just seems impossible. We also realized we have no context for how this is all going to happen let alone any timeline for completion. We used the designer as a bit of a sounding board and he completely understood. In fact, he called a meeting with the builder that he could “mediate” to get back to basics. Before that meeting as Bill and I were having our reality check, we discussed the idea of not dividing the lot right now. Maybe we should just get a construction loan (if we could – we’re mortgaged to the hilt), do the remodel, sell our current place, move in, let things settle down, and then subdivide the lot later. Hmmmmm, could that simplify things? We also learned from our new tax guy, that if we sell that back lot in the first year of owning it, the capital gains taxes are going to be about 3X as much as they would be if we waiting a year and a day. Interesting information, and boy are we glad we hired our own team.

So we go to this meeting with the designer and builder, and what does he propose? He proposes that we don’t subdivide the lot right now. HA! Exactly what we were thinking! He suggests that we try to get a construction loan, do the remodel and subdivide later. If we can’t get a loan with one of the lenders we are dealing with, he has someone he works with that can probably make it happen (wink wink). We start to review the numbers, and although there are some additional fees we have to incur if we just do the remodel, we will get those paid back in the future when we sell the back lot. After discussing it for a while, we realize that it feels much more reasonable And comfortable to do this. The designer makes a great point in that the original plan of subdividing first would be more suitiable to a real estate investor, and not for two people (yahoos) like us that just want a cool new house. I like him even more now.

Okay, so now we start the process of getting the construction loan… Bills department for sure and he’s so amazing (hot) when he’s “working the numbers” and seeking out the best mortgage broker. Oh my, maybe that’s for another blog. Lol. Should be interesting, but so far the lenders we have spoken with said it is doable to get the money we need to do the construction (wow, really?). The only question is, will we be able to eat? I guess they will bundle all our loans together which could ease the monthy payments, but we’ll know more later.

Part of getting the construction loan is having construction estimates from the builder which we are getting now. The wheels are in motion. Thank goodness!

Now the fun part! More drawings!!! I will post them as soon as I’m back in front of my computer (presently posting from the iPad at 35k feet). Our designer is close to submitting our plans to the city for permits. So we actually have pretty firm drawings of what the house will look like once we get there. It strikes me so funny that all the design and permit work stays in motion no matter how many obstacles you hit on the financing side. It’s like “hey, look at this great house I may never get to live in!” I shouldn’t be so negative, I’m sure we’ll get there. The design work has been really easy. Darren nailed it pretty much from the start and we have only made pretty minor changes. There’s only so much he could do in the space with all we wanted, so that made it a bit easier, and I’m glad for that.

So here are some of the drawings and points of interest (if you’re interested):

Flipped the workout room and MagnaMemos studio. Realized I wanted studio on the main floor for general ease and shipping/receiving simplicity. Yes, I have a shipping and receiving department. It’s called me and Bill.

Lots of work on the kitchen. It’s actually no bigger than our current kitchen which became an issue since we cook A LOT. Had to move some things around to gain some space and I’m still not sure about the cooktop on the island. Still think we may make changes. TBD

My office (main floor) is going to be the most kick ass room in the house. ‘Nuf said.

Birth of the “monolith”. More on that in the future.

Laundry/pantry combo walk through off the kitchen is my fave. Check it out. Amazing space with wash tub in the laundry on the side if the M2 studio for my use when needed for M2.

Garage = bigger. More MagnaMemos needs. Poor bill. 🙂

I think that covers it to this point. I will do my best to be better about posting. Thanks for reading!

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