Purchased big project home, certain will need suggestions/advise/moral support too :)

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bud16415 said:
Neal is correct as is Floridagal. There is a huge difference between a rehab and completing a partial done home. You guys won’t have the demo work and won’t be dealing with a million unknowns as you can for the most part assume all that has been done has been done correctly and to code. We could have moved into our home at any time after closing as it was technically sold as an established dwelling but we chose to take about 6 months to get the major dirty work done. Even though we had a working bath and a bed there like you mentioned oh and a microwave and mini fridge.
We paid cash at the sale and cash as we went along for supplies so there was never a note against the property and that allowed us to run pretty much in stealth mode.

You won’t have that option. Around here it is very difficult if not impossible for a person to secure any kind of line of credit solely against a project such as yours based around the home owner doing the work unless he is a contractor with a track record. In my parents day my dad went to the bank and said I bought a lot and I’m going to build my own house I have a job and I want a loan to build the house and they said ok. More recently I have helped one person build a house and have a good friend that built his own home and both were on their own as far as money and in both cases the same banks later said oh nice house would you like a home equity loan against the home we thought you couldn’t build. You may have to leverage your current home or something to secure a loan.

I don’t know how it is in Fla and I know a lot of financial houses are holding paper on a lot of unfinished projects so maybe they are ready to think outside the box. I always try and look at it from all perspectives and I did this with the short sale we bought. I say to myself this house has been on the market for 2 years and they are almost giving it away. How come some builder/flipper/rental landlord hasn’t scooped this up. In our case it was the little town was exactly where we wanted to live and a place where hardly anyone else wanted to live. So for a builder or flipper putting a lot of time and money into it he would still have been competing in a depressed market. For a landlord they are looking for turns on their money and not major renovations. In this town it would have rented but there were more for sale that just needed fresh paint.

The only real thing an individual has going for them is sweat equity and location. You have to view it as you are in competition with everyone else that has looked at it. They have all carefully calculated what the final cost will be for them and how they have to finish the house and then they factored in after it was done what they could likely expect to get as a return and how long that might take. You have an advantage you know you have a homeowner ready to move in and it is what you want. You also don’t need to turn a profit you just want to come in under the market value.
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Thank you Bud for your input, all helps a lot reading all you and others have gone through while building or rehabbing. The home wasn't on the market and never has been, we happened to come across the home…so I asked the real estate agents about the home, and no one could give me any information on this partially finished home. So I did a little research and found the homeowner, and contacted him to find out if he would be interested in selling, and he was due to circumstances in his life going on. We made an offer and he excepted after I got an appraiser to do an appraisal on the home as is, and estimated value upon completion, and the numbers we're perfect for us. So we are paying cash, and all the building materials, sub contractors, etc we will be paying out of pocket. Once it's complete we may decide to take out a small mortgage on it but it's not a big hurry.

I have a complete history of all permits, inspections, and results of inspections, everything has passed and there are no problems with any of the work that's already been completed. The seller had started the home to be a hurricane proof home, he went above and beyond what was actually required by the building department.

All the banks that I spoke to before we signed the contract and purchased stated that based on my husband being a licensed elevator contractor that they would give a construction loan for Owner/builder but since the home is what they consider 85% complete they couldn't give a construction loan. Which we were alright with since we could purchase the home and complete the home with out of pocket cash.

We would want to get a small mortgage after it's complete and after we sell our primary home in a couple years so that we can have some interest as a tax ded… we will also apply for homestead exemption after we sell our primary home is a couple years. Although, not sure we might be better off not taking out a mortgage once it's complete because the tax ded probably would be less then the benefits of not having a mortgage, we'll cross that bridge when we get to it…lol

Thank you so much for all the input, it really helps a lot to read what you guys have to say.
 
You are very welcome. It sounds like you have done all your homework and thanks for clearing up why you wanted the mortgage. My way of thinking is you do want some cash reserve and a project like this could draw your savings down pretty good but we are the type people that like the idea of being mortgage free much more than reversing the process once we achieve that goal. Something like a home equity line of credit would give you ready cash if you needed it and the trick is to never need it.

I don’t know what the rules are in Fla but if you pay cash for the place I don’t see why you couldn’t finish it in part to make it so you could live there and then take your time with the rest. I’m not sure what you do for insurance in that case. But if the banks are telling you its past the construction phase and you do the things to make it safe I don’t see any reason you couldn’t get insurance on what you have at the time as long as it’s all documented.

It’s good they recognize what he does as a contractor and will apply those credentials to your project. But its better yet you have the cash to get it done.

It really boils down for you to how long you want to take compared to how much you want to spend on labor and someone else profit.
 
bud16415 said:
You are very welcome. It sounds like you have done all your homework and thanks for clearing up why you wanted the mortgage. My way of thinking is you do want some cash reserve and a project like this could draw your savings down pretty good but we are the type people that like the idea of being mortgage free much more than reversing the process once we achieve that goal. Something like a home equity line of credit would give you ready cash if you needed it and the trick is to never need it.

I don’t know what the rules are in Fla but if you pay cash for the place I don’t see why you couldn’t finish it in part to make it so you could live there and then take your time with the rest. I’m not sure what you do for insurance in that case. But if the banks are telling you its past the construction phase and you do the things to make it safe I don’t see any reason you couldn’t get insurance on what you have at the time as long as it’s all documented.

It’s good they recognize what he does as a contractor and will apply those credentials to your project. But its better yet you have the cash to get it done.

It really boils down for you to how long you want to take compared to how much you want to spend on labor and someone else profit.
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Bud,

I'd think since the home has hurricane rated windows and doors, a secure roof that has more then required tie downs and the way it was constructed we should be able to get insurance once the insulation/drywall/ceiling is stalled and finished. I agree about being mortgage free, as when you think about the possible tax ded benefit of the interest paid, we would ultimately save more not having a mortgage at all. If need be which I doubt we can get a equity loan. Having 3 adult sons that can all help here and there, our neighbor that has also offered to do some of the work with us, and the contractor that is already there and being put up with his crew at the resort, I think we should be good. Really if you stop and think about it there isn't a ton of work, time consuming work because of the sq footage but the most crucial work, electrical, plumbing, stucco, roof are all completed and well done according to my husband, and the contractor that's down there working on the resort.

I can't see with us subcontracting out the drywall/mudding, that the flooring, painting, bathroom/kitchen cabinets, installing appliances, tile work is that difficult, more time consuming then anything. The staircase is something we have to check further into, as it seems like we might be smarter to get someone in to finish that work. The railings around the loft area on the second level is also something we may end up hiring to install.
 
when i applied for home insurance on a home i was building, i was told I had to be living in the home to get insurance

they would not insurer without it being occupied. so i moved in. they came out to inspect/look it over and were satisified
 
I'd think that there's insurance for the home while under construction. I know there's liability insurance available for the workers. I'll have to check further into it.
 
I would require any sub you hire to provide proof of workers comp and general liability insurance with you listed on the certificate before they set foot on the job. If someone gets hurt and they don't have it, you may be liable for a claim. This is totally different than structure insurance.
 
The house we bought we spent $24,000 on and when we talked to the insurance provider they issued a policy with the contingency of doing a walk around inspection. There were several issues based on the square footage and the outside condition being good they were suspicious looking in the windows and by all the scrap already piled along the drive way they called and threatened to cancel due to the fact we were not living there. We told them we were and told them we were living in the second floor. We then moved a bed in and got one bedroom cleaned up enough that we could actually be living there if they asked to come in. we had buckets of water to flush toilets even though water wasn’t restored yet. They bought it and only had a few complaints one was the pile of scrap was too close to the garage and the door I put in to the deck didn’t have a deck yet. I moved the pile and screwed a board across the door telling them it couldn’t be opened and they were fine. I wasn’t too worried about insurance on the building as we didn’t have a great deal of cash invested but was worried about someone getting hurt.

I would say from what you have told us the open stairs will need a sturdy temp railing to code even if its made from 2 x 4’s you might have to cover some outlets and tell them you are living there. (Not sure in today’s world if you can.) I found the best way was to let them suggest stuff and then just agree and do it. I really didn’t think they had a clue about actually building anything but had learned a lot of things that were red flags to look for. I grew up for the first 10 years of my life living in a finished basement house as my dad built the upstairs. But that was then.

I don’t know what is legal as to living at a location where the inspection process has not been taken to the final one. The new codes and that whole process is something I would become very familiar with before I signed to buy.

I also would be very careful about workers without proper coverage. Family and friends you have a level of trust with but some guys hiring out of the builder center parking lot and working under the table I would think twice about.
 
Thanks again guys,

I'm going to call a couple Insurance companies tomorrow to see what's available out there, if any. If they require us to live there I'd do as Bud did, we can move a air mattress in and pretty much make it look like we're living there if need be, besides we would like to get one working bathroom functional and set up a temporary bedroom while we are working on it anyway.

I do want to make sure any workers are covered too, especially any sub contractors, I'd want to see that they are insured and list us on the policy the last thing anyone needs is to have a worker hurt and then come after us. That wouldn't be a good thing at all, first I wouldn't want anyone to get hurt, secondly I wouldn't want to be liable.

The staircase and loft safety railings (temporary 2 x 4's) is the first thing we need to do once we get down there after the holidays. Even for our own safety they need to be put in, we've purchased all the 2 x 4's and have that bright orange plastic mesh temporary fencing as well. I don't want to risk anyone getting hurt, currently the previous owner has a cat walk across the loft area (Beyond me why) but its there yet there's plenty of room to walk around without having to cut across a cat walk. Maybe it was there from when they installed the HVAC into the 2nd floor ceiling but it's not useful at this point. We will have a lift brought in to do the insulation and drywall in the ceilings.

As far as outside there is some debris laying about but most seems like floating boat docks not construction debris, when we get down there after the 1st we will clean up the lots, the house sits on one lot, a detached finished garage is sitting on another lot, and the other two are vacant with no building on them at all, which will remain vacant, we will landscape them with native vegetation and some up-lighting with gravel walk ways.
 
PS.. So are any of you up to coming down to the beautiful Florida Keys to do some work, will pay….and have a nice 24 ft luxury jet boat, and a couple jet skis as perks, but then you probably would fall into island time and only want to work half days like the rest that have caught the dreaded Florida Keys disease! haha. All of you guys have been great, making me think and rethink and throwing things out there that I hadn't thought about either! I can't wait to post some photos of what it all looks like now and as we progress! Pic as is soon to come!
 
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Havn't met a home owner that doesn't make changes after the house is framed.
Designers don't always seem to be in the loop on some things like building the bathroom 59" wide for 60 " tub or kitchen windows over cupboards should be more than 42" from the floor.
Have the kitchin cupboard people in, they usually mark out the cupboard on the floor and make suggestions for the best design, the plumbers electricians and even the hvac guys work to that plan.
 
Neal,

Your so right, the plans the previous owner has that we've assumed with written permission from his engineer aren't exactly what I want, or need. Example the back of the home doesn't have any doors that would lead to a deck that we will be building, and yet there's side doors to two patio's. It's beyond me why they wouldn't have installed doors on the back of the home since it would be the obvious place to put in french doors. Also, theres a tv room on the 2nd floor, which isn't necessary when you have a large living area on the first level and now days most have tv's in bedrooms. So that room we could actually close off and turn it into another bedroom, it has a closet already so we really only need to amend the plans and add the framing to change it to another bedroom. We shall see, may wait on that until after the county appraiser estimates the value since adding an add'l bedroom will increase the value?!?
 
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slownsteady said:
Not sure how FL deals with it, but in NJ, if the room has a closet, it's counted as a bedroom.
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Slownsteady,

Even if its not framed out? Currently is open, when you walk up the stairs its a large open area. If it's the same here then there would be no point in waiting to get it framed out as a bedroom and less of a mess later on with drywall/sanding, etc.

I would like to get all the insulation/drywall/sanding done at one time instead of having to deal with the mess after the property appraiser comes. If it's not considered a bedroom yet because its an open room with no framing other then exterior walls and closet then we could save money on the estimated appraised value, I'd think?
 
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Another change I'd like to make since Neal kind of brought it up, is to install windows (one solid piece of glass on one wall, and another solid piece on the side wall) in place of a backsplash. I've seen it in a house and thought it was really a nice touch. Something that I've thought about a lot, and seems like it would be nice since part of the kitchen looks over the back of the house, the other side faces the side. Of course this would require custom made glass and the glass would have to be hurricane rated glass. Probably a pretty penny but it is something that I'd really like in the kitchen.
 
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Entertainment deck, hubby can dart to the kichen and back while bar-b-queing and guests don't have to go thru kitchen to visit him there.
Extra windows, or moving windows can be a problem. You have to start at the roof and identify bearing loads, trusses that have other trusses attached to them are girders and require extra stud all the way to the foundation, windows above, direction of roof trusses and direction of floor joists above all have to be considered.
Windows to close to the floor must be safety glass, most people change those to shorter windows when they get the price. Here it is somewhere around 18".
 
Floridagal said:
Slownsteady,

Even if its not framed out? Currently is open, when you walk up the stairs its a large open area. If it's the same here then there would be no point in waiting to get it framed out as a bedroom and less of a mess later on with drywall/sanding, etc.

I would like to get all the insulation/drywall/sanding done at one time instead of having to deal with the mess after the property appraiser comes. If it's not considered a bedroom yet because its an open room with no framing other then exterior walls and closet then we could save money on the estimated appraised value, I'd think?
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I'm not sure about the sequence of things or the rules for FL. so I can't answer directly. My experience here is that the TV room has a closet, therefore it's appraised as a bedrm. This affects the size of the septic system I had to put in (sized according to # of bedrooms) and of course, the taxes.

One guy i know went so far as to wall off a couple rooms with drywall until after appraisal, then he cut the holes for the doors afterwards. Just sayin'.
 
. I like to hide rooms. to be used as storage for furs, jewelry, guns. or panic room
if it were up to me, one of your rooms would disappear behind a book shelf, entertainment center of full length wall to wall mirror
:)
 
I like both ideas, easy enough to have a hide away small room/area. Actually a great idea if we decide to offer it as a seasonal vacation rental for a couple seasons before we retire. We could store our personal items in such a hidden area/space. It would be very easy to frame one out off the tv room on the second level or turn what the previous owner framed out as a wine cellar on the first floor into a private space to store personal items, such as cloths, shoes, and things we don't need to bring back to our primary home and yet need down there. Hanging a full length mirror to hide a locked space for our personal items would be a great way to hide it as well. Thanks for a great suggestion!
 
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