Need some real estate/building advice

Karl La Follette wrote: 1859 North US Highway 281, Johnson City, Texas 78636 - Perfect ranch-live-work opportunity just 1.25 miles North of the Pedernales River in Johnson City, Texas. Structures include: a 1998 Schult 2,300 SF 3 bedroom 2 bathroom manufactured home with many luxury features; a 225 SF efficiency unit and a separate 150 SF living area with bathroom (shower only) - both structures stay cool under a 60' X 60' pole barn; a horse shed. Improvements are on a septic system with a 20 GPM well. Total monthly rental income from homes is $1,125 + utilities. Land size is 10.01 acres with 400' of frontage on US Highway 281 North. 9.01 acres are ag exempt. Land features 2 pastures and a 50' X 50' pond. Kids attend Johnson City Schools. To visit the property, take 281 1.25 miles North of the Pedernales River. Property has a green automatic entry gate. Asking price is $275,000. Call RE Broker Mark D. Blake at 512-293-1041 today for additional information and a property tour. Flyer. Information about brokerage services. Survey.

But if the buyer can't get financing they like then the property can't be sold.

Duke wrote:

Josh wrote: Ikea, man. If you're not picky about finishes and you have time to put them together, you can get a decent sized kitchen worth of cabinets with reasonably well made boxes and pretty high end hardware for around $2500, exclusive of counters, fixtures, appliances, etc.

Which leave $9500 for countertops, appliances, bathroom fixtures, paint, etc. that he had in the original $12k. Not gonna happen unless you buy the crappiest stuff available or go used and get lucky.

Like I said before, if I spend more than $500 on that stuff I'll be surprised. Free plywood or solid doors make great countertops. Free leftover or recycled tile makes a great countertop surfacse.

I'm kinda surprised at you guys lacking the grassroots mentality here

But if the buyer can't get financing they like then the property can't be sold.

I guess I'm missing something... if its unzoned (or zoned residential) what is stopping the bank from lending? Its a 2000 sq ft house with attached garage. I'm seriously asking for my own education. I don't understand what separates a traditional property from my idea on paper.

by the way.... another super quick and dirty look at a possibility for the living quarters of the building I'm thinking of. Down right would be kitchen/dining, upstairs left and right are bedrooms and the walk between them has closets/bathrooms. Down left could be a third bedroom or rec room. I haven't added stairs to the drawing yet.

curtis73 wrote:

But if the buyer can't get financing they like then the property can't be sold.

I guess I'm missing something... if its unzoned (or zoned residential) what is stopping the bank from lending? Its a 2000 sq ft house with attached garage. I'm seriously asking for my own education. I don't understand what separates a traditional property from my idea on paper.

Lenders want to be able to sell a property quickly and get their money back if the borrower defaults. Odd properties are slower/harder to sell.

I'm away from my code books, but you can probably combine the two occupancies into one building, you will just have to have a good separation wall like you implied. Note that code requires 6'-8" clear head height for occupied spaces. Realize you aren't required to follow code, but it is there for a reason based on lessons learned the hard way.

For additional insulation you may want to add rigid insulation to the bottom of the purlins if the manufacturer can't increase R-value in the "bag and sag" insulation.

Sounds like you have a plan. I think most of us love the idea in some form or another. I mean- who doesn't like the idea of a shop with attached house?

Banking regulations require "adequate collateral" for any loans made. If they make you a loan on a property that can't easily be sold they have to answer to the banking examiners which can have serious consequences.

If they are going to loan you money for something worthless (in their eyes) then they will be loaning the money to YOU, and not on the property. Loaning the money to YOU would require a very good relationship with them & make it a personal loan based upon your past history with them at Personal loan rates & terms (think credit card rates and terms).

Alternatively you could cross collateralize the property against one of your many large CDs. Don't have many large CDs? Now that's a problem.

How many buyers who would actually want to buy your "home" later would have those types of relationships?

I'm not knocking your idea in concept, just in execution. There are ways to build what you want to build (all cash is one way) but you've got to realize you've got a limited appeal product to market some day.

curtis73 wrote: I'm kinda surprised at you guys lacking the grassroots mentality here

Curtis, you are missing the point.

Nobody doesn't like your idea- it's cool.

But it is NOT grassroots, and therein lies the problem.

It's not grassroots, because its not your money.

You are wanting to use salvaged materials, skirt the "rules", and do everything your way, which I respect.

But then you say you need a lender, or a grant, or some way to get someone else to pay for it.

The building is the collateral for the money someone is lending you. They want it to have a value that they can translate into cash by selling it to someone else if you default. They won't put their money into the deal if it is a weirdo thing that very few people would want.

I am building a grassroots Lotus with a transplanted powerplant because I want to. But I am doing it with my own money, and don't really care if nobody else likes it.

You can do all that stuff if you want to, but if you need to use someone else's money, your gonna have to play by their rules.

curtis73 wrote:

Duke wrote:

Josh wrote: Ikea, man. If you're not picky about finishes and you have time to put them together, you can get a decent sized kitchen worth of cabinets with reasonably well made boxes and pretty high end hardware for around $2500, exclusive of counters, fixtures, appliances, etc.

Which leave $9500 for countertops, appliances, bathroom fixtures, paint, etc. that he had in the original $12k. Not gonna happen unless you buy the crappiest stuff available or go used and get lucky.

Like I said before, if I spend more than $500 on that stuff I'll be surprised. Free plywood or solid doors make great countertops. Free leftover or recycled tile makes a great countertop surfacse. I'm kinda surprised at you guys lacking the grassroots mentality here

I'm doing my kitchen right now. I got a new set of stainless Frigidaire Gallery range/microwave/dishwasher/refrigerator for $1900 incl. taxes and delivery. Ikea butcher block countertops look great and come out under $15/SF. A nice sink and faucet might run $2-300. My kitchen is small, but there won't be anything about it that won't appear high end, and I will end up spending about $6k on everything. Picking things off the trash heap isn't the only way to avoid spending the kind of money you guys are throwing around.

curtis73 wrote: Having said that, there is a reason that people do it. It works. There is also a reason that people don't do what I'm proposing. Its a new idea that isn't proven.

This is a misconception. Mixed use spaces are not a new idea.

Drive through the downtown area of Anytown, USA and look up. Above the commercial storefronts of virtually every older downtown building between 50 and 100 years old you will see that they were originally built with apartments above. Retail, auto shops, textile mills, all had apartments above. Mixed use space is as old as this country. Unfortunately, it has been zoned out of existence.

The requirements of the NFPA are stiff, and expensive. The reason these spaces have been abandoned is that use of them as residences (over commercial spaces) now require sprinkler systems, fire separations, and other items which are cost prohibitive.

Yes, you can build fire walls, sprinklers, etc. But don't kid yourself about the costs. Hundreds of thousands of property owners across the country have already learned this lesson.

And without these items "properly" done, you can forget about financing (insurance, grants, etc.).

Yet another quick and dirty floor plan of the whole thing.

carguy123 wrote: Banking regulations require "adequate collateral" for any loans made. If they make you a loan on a property that can't easily be sold they have to answer to the banking examiners which can have serious consequences. If they are going to loan you money for something worthless (in their eyes) then they will be loaning the money to YOU, and not on the property. Loaning the money to YOU would require a very good relationship with them & make it a personal loan based upon your past history with them at Personal loan rates & terms (think credit card rates and terms).

I fully understand that concept, however I guess what I'm thinking is that even if I borrow $300k, much smaller properties than what I'm planning are consistently selling for $400-600k. I guess what I'm asking is... why does my design skirt the precedent and make it worthless to the bank when the opposite seems to be true for every other mixed-use property in Austin? ... Unless these other properties are all cash deals, which is possible, but improbable.

What I'm saying is, there are a lot of these properties down here, they sell quickly, and for 3-5 times what I would borrow for my idea. I fully understand the bank being unwilling to loan on a building that isn't built yet, but let's assume I get past that. Why wouldn't anyone lend someone $500k to buy it in the future when the precedent has been set, the market has ample selections of this type of property in the immediate vicinity, and the bank is more than covered for their losses if I default (based on market value right now)?

Alternatively you could cross collateralize the property against one of your many large CDs. Don't have many large CDs? Now that's a problem.

I have tons of them... but I'm not giving up my ELO box set for anything, man. (yes, that's a joke). I have some C of D's but nothing of enough value to make a significant difference.

How many buyers who would actually want to buy your "home" later would have those types of relationships?

Like I said, the ones that hit the market here are sold pretty quickly. I think (at least right now in this market) they are going MUCH faster than traditional homes. Its funny to see a $500k 5/4 home on 2 acres in a primo neighborhood sit for a year on the market, and then see a structure like mine go in a (relatively short) 3-4 months.

I'm no expert, but it seems like demand is quite high for these types of properties, and unless there are a bunch of rich hobbyists paying cash, the banks are VERY fluid with loaning money to buy them all.

I understand your (very experienced) viewpoint and I'm sure I'm just missing something, but I would agree with you if my amateur market research didn't directly disagree with you. It sure does seem like a bank would turn up their nose, but I think the opposite might be happening in Austin. They seem to be the most demanded properties and they are selling for top dollar, so maybe banks are seeing a potential in them that we normal mortals don't?

I'm not knocking your idea in concept, just in execution. There are ways to build what you want to build (all cash is one way) but you've got to realize you've got a limited appeal product to market some day.

I actually appreciate the ball busting. I get a little defensive sometimes when someone says "you can't do that" just because its not normal, but having someone experienced like yourself to help me understand things is crucial in my learning curve. I appreciate it... keep teaching me

Conquest351 wrote: I made this plan for my friend Nick. Feel free to steal it...

Did you draw that without scale? How come the toilets and the car headlights are about the same size?

Curtis:

The fact that your research shows similar properties selling for so much more than what you are figuring you could build it for should be a hint- it's gonna cost a lot more than you think.

If the returns were really that good, lots of people would build them.

Talk to the lender.

curtis73 wrote: Ok, i couldn't get a 3D rendering in my other software, so I whipped this one up super quick and dirty on ICON's software. living area is closest to you. Inside the living space, imagine a small loft space on the left with a guest room upstairs and down, each with a bath, then a large loft on the right with the master upstairs and kitchen downstairs. Basic specs: 60 x 120 total, 8 ft canopies at 12' high, large door on the end is 12w x 14h, the rest are 10 x 12. The back side (not visible) has a matching 12 x 14 and one 10 x 12 countering the four on the front. Walls are 16'h with the peak at 26'h. Living space is 24 x 60 with two lofts totalling about 2000 ft of floor space, 3br/2ba.

I really don't believe you can build this building for $10 per square foot. I know you are doing your research, but I've been building for over 30 years. 5 roll up doors (1 oversized) , plenty of windows, additional walk-through doors, roof overhangs on the outside, 16' eave, etc. etc. Can't be built for $10 per SF. I am sorry, you are underestimating.

Additionally, your section showing the heights shows inadequate headroom. Doesn't meet the building code.

I know, it's just a rough draft.

Are these other properties in the area you want to build and are they similar in usage?

owner finAnced stuff in texas

Not that this is really relevant to you in TX, but in Indiana many people in rural areas are building steel-frame home/shop combos, as apparently they're only taxed as a shed/outbuilding, not a residence.

SVreX wrote: Curtis: The fact that your research shows similar properties selling for so much more than what you are figuring you could build it for should be a hint- it's gonna cost a lot more than you think. If the returns were really that good, lots of people would build them.

This seems likely to me.

I know that if I could get exactly what I wanted by building for much less than sorta what I wanted by buying I'd be building. And I can't be the only one. Mixed use or otherwise.

So that means the question is:

In a nutshell, what is the difference between these properties that you're using as a market reference and what you want to build? Answering that question seems key to your financing (and other ability to finance if you sell)

carguy123 wrote: Are these other properties in the area you want to build and are they similar in usage?

yes, in fact several in the same zip code. I found one that is being used as a hobbyist race shop. One is pretty clapped out (texas white trash style) and being used as a plain old auto repair shop. The other one I had personal experience with seems to be just used a fancy "look-at-me" garage... either that or the current residents had already done a lot of moving out and cleaning up.

SVreX wrote: I really don't believe you can build this building for $10 per square foot. I know you are doing your research, but I've been building for over 30 years. 5 roll up doors (1 oversized) , plenty of windows, additional walk-through doors, roof overhangs on the outside, 16' eave, etc. etc. Can't be built for $10 per SF. I am sorry, you are underestimating.

I have built two 40x40 steel garages on my dad's property and they came in at under $20k. These prices aren't mine.... These are quotes based on a 20-page schematic with CAD drawings of each elevation, floor plans (minus the living space improvements of course). These schematics were handed to ICON, Morton, Butler, Bulldog, and General Steel. They worked up the quotes, not me. So unless 6 major steel building companies are in the business of bait and switch, I'm pretty confident.

Now, that of course means that I provide the slab, the electric, plumbing, etc, but I can email you Icon's quote if you'd like. It includes insulation, construction, tax, the works..... and as you might notice, it also doesn't include the two oversize roll-ups. Those will be sourced on site.

Additionally, your section showing the heights shows inadequate headroom. Doesn't meet the building code. I know, it's just a rough draft.

Yeah, the first two feet nearest the wall are under 6'. I can either extend the wall higher, or drop the floor down a foot.

If the returns were really that good, lots of people would build them.

Maybe because they're all doubters like you Just kidding. This forum is a testament to the potential value of the non-traditional. If you guys went to a general car forum and asked if you should buy an E30 with 200k on it, they would all say you're nuts... buy a Civic instead because its normal and represents mass appeal. I guess what I'm hoping for is the GRM mentality of how it can (or can't) be done.

If it can't be done wisely, I won't do it, but I'd like to make sure I can't before giving up hope on it because the "bank might not lend" or "its not normal."

But honestly, these structures represent a small portion of the market, and (like you said) not as many buyers... but right now there are proportionally more buyers of this type of property than there are standard residential.

Seriously.... if I wanted a great return on my investment, I would buy a new home with a 10 year warranty. Since I detest new rabbit-hutch homes its not a wise investment for me. Kinda like buying a 67 corvette... it could be a great investment, but I don't want a 67 corvette, so why would I spend $20k buying it?

Right now anyway the demand seems to be high for these properties and supply is relatively low. That might change, but just because the property is uncommon doesn't mean its not a wise investment. Not everyone buys a Honda Civic either. There is a great market for less-than-common cars (as this forum likes to highlight)

Again, I am arguing my points based on a passion for what I want, and I appreciate the counterpoint from experienced folks, but is it possible you are just saying it can't be done because its not the common, normal thinking... because its not a civic?

I know that if I could get exactly what I wanted by building for much less than sorta what I wanted by buying I'd be building. And I can't be the only one. Mixed use or otherwise. So that means the question is: In a nutshell, what is the difference between these properties that you're using as a market reference and what you want to build? Answering that question seems key to your financing (and other ability to finance if you sell)

Honestly? Size and luxury. Mine is bigger and will have less marble and walnut. Back on page 1 I linked to a property that is darn near identical to what I want, but I want less fancy and more space.

... at least, those are the only differences I've found so far. I did find one in Leander that is currently in Escrow, which means there is at least one on the market that a bank is willing to fund. I don't know how many sexual favors were traded, nor do I know the terms and the down payment, but I at least know its not hopeless.

Like I said, I'm a bit passionate about this, but I don't want to come across as the 15-year-old ricer kid who is asking about the biggest wing he can put on his Tercel. I really want to be educated on why it will or won't work.

S2 wrote: I'm away from my code books, but you can probably combine the two occupancies into one building, you will just have to have a good separation wall like you implied...stuff

2 hour separation for unsprinklered spaces between the shop and the residence according to the code currently in force (2006 IBC) where I live. YMMV- everything's bigger in TX, right?

curtis73 wrote:

carguy123 wrote: Are these other properties in the area you want to build and are they similar in usage?

yes, in fact several in the same zip code. I found one that is being used as a hobbyist race shop. One is pretty clapped out (texas white trash style) and being used as a plain old auto repair shop. The other one I had personal experience with seems to be just used a fancy "look-at-me" garage... either that or the current residents had already done a lot of moving out and cleaning up.

Same zip code isn't the same thing as in the same area. By area I mean within 1/2 to 1 mile?