All Forum Posts by: Nik Moushon

@Marc Estepa

Most people don't realize this until its too late, as is evident by all the responses you've gotten, but more than likely your idea is not going to be able to legally work.

The biggest problem you will run into is the the vast, vast majority of jurisdictions do NOT allow Tiny Homes to be lived in full time. Thus, you can't convert it to an ADU because it cant be occupied full time. Tiny Homes skirt around the building code by calling themselves "RVs" but that also means that most city/county code does not allow RVs to be lived in full time. So its a catch 22. Almost all the Tiny homes that have been and are being built do not meet residential code and the odds are you wont be able to convert them to be able to at a cost effective manner. And ADUs are subject to meeting the residential building code and have to be permitted and inspected to be approved as such.

There is a chance your jurisdiction will allow it but odds are they wont. Hate to burst your bubble....

The new 2018 IRC (International Residential Code) does have a new section dedicated to Tiny Homes. I have not read it yet so I'm not sure what it says or how it applies. WA state pushed back implementing the 2018 code version until July bc of covid. I dont know what the codes are like in NC or when the 2018 version will be implemented. 

@John Powers

Both @Steve Vaughan and @Jay Hinrichs have good points. If you are worried about, or just cant afford, the entry cost then you will need to start looking at farther out properties. Steve has the 411 on Waterville not sure if its low enough for you or not. Ephrata and Quincy are decent places to look as well. They are both good locations because Quincy has a huge draw for the data centers. With Microsoft dumping a bunch of money into the schools in Quincy it is primed to see a small boost. It will never get to Wenatchee level but its a decent area with lower costs. Ephratas a bit farther away than Quincy and thus a bit cheaper...but its even smaller than Quincy. So its a trade off as rents will be lower too. If you go north of Chelan you need to go up to Brewster till you get prices dropping to be affordable. I have a co-worker who lives in Brewster and commutes to Wenatchee every day....its a minimum 90min one way but its just that much cheaper that they can afford to live there. I'm not sure what the rental market up there is though.

 John, I grew up and lived in Peoria IL for over 20 years. I currently live in Wenatchee WA. I will never be moving back to IL and will never own property in IL. The state gov has constantly raised property taxes and other income taxes year after year and shows no signs of stopping. The state has lost more people, than gained, for 7 years straight now. It lost a net of 80k people this past year alone. Until the government gets its act together and the debt gets under control it is not as friendly as other midwest states. Yes, IL has really cheap property but so does other mid west states like Ohio or Michigan. If you are going to be living in WA and want to own property in the midwest....just pick another midwest state. 

As your first rental property though I would advise against renting from out of state, especially half way across the country. If you are set on living in WA then I would focus on finding one there. The key for WA state though is location. Price can vary A LOT. From pricey that looks somewhat similar to the midwest to prices that are stereotypical of what you would think west coast prices would be. The trend is that the east side of the mountains is cheaper than the west, though be aware that that is not firm and you can find small pockets that go the opposite of that trend. 

Let me know if you have any questions about either state. This is obviously my personal opinion and others could have their own too.

 Unless you are going to keep it a church...then ya, you'll be changing a lot of things. I'm not talking about redesigning the look of the building. I'm talking about its Occupancy Type and Use. These are technical code terms. As it sits now, the code and zoning wont let you do much else with it. So pretty much your only option is to find another religious congregation to rent it to. Other than this it will require changes of all types. 

No matter what you would/could do with it you have three MASSIVE hurtles to jump over first. 

1 - Historic Registry - This could put a lot of limits on what you do with the building.
2 - Zoning/Re-zoning - More limits and very time consuming
3 - Parking - If you don't have parking you can't put anything in here other than another church. As soon as you change uses you have to meet current codes. 

If you can't tackle and overcome ALL three of these you are throwing money into a very deep pit. All three of these will require a lot of money and a lot of time. You could easily put in another $100k and 2-3 years of time before you could even do anything on the building.

That doesn't including  hiring an architect and other professional design services. The design and build out will be incredible expensive because the nature of retrofitting old building for new uses...is just expensive. You will have to have an amazing pro-forma and investment strategy to bring in investors on this. The numbers are going to have to be way above normal returns to justify the risk on this. I dont know the area at all. But you will need to do some serious research and studies on the area to see what could survive here, what would draw people to it and what would bring people back again and again. There are a lot of dominos that need to line up correctly for this to fall into place. 

With that said, I LOVE the idea of giving old buildings new uses and new life. They can be extremely successful. As an architect these are the kind of projects I would love to be a part of. But there are sooooo many things to consider with the design and with that comes a lot of expenses. Other's have said, and its true, it will more than likely be cheaper to build something new  than fix this up. But those people also don't see the point, or the draw, that these old buildings bring to an area when they are given a new lease on life. The idea of this is great, lots of potential, but you HAVE to make sure the area needs and wants something like this to happen. If there isnt the local support and the draw then it just can not economically survive. 

I bought my person residence in July 2019....it was 4.125%. I just did a refi and got 3.2%. Your rate is great. 

Not much you can do about fees. You might be able to shop around but you arent going to save that much. Sometimes the lender will reduce their fees some if you just ask. 20k to close on 560k is pretty good.

Progress is coming along rather nicely. Framing started on Wednesday this last week. All the first floor walls are up and have started on the second floor floor trusses. The biggest thing that needed to get right was the fire wall between the units. Since this is being built like a Townhouse house that wall needs to be 2-hr rated double wall. I talked with the city about this (I decided to change up the detailing on this wall a little) and they mentioned that out of the 7 Townhouse projects that had been built this year, only one built the fire wall correctly the first time. So they are going to be SUPER picky on this. Had the inspector out for each layer of the gwb to insure it was done correctly. So this took a lot longer than it normally would. But way cheaper than trying to fix it. 

Before we demo'd the shed, I went in and removed a lot of the T&G flooring and wall sheathing that was used. It was 94 year old pine that was still in really great shape. Looked horrible from almost a century of build up. But I got the planer out and have started the long and slow process and plaining a ton of boards. I will be using this as accent walls on the inside...probably in the master bath or entry way. Havent decided yet. 

The pile of wood on the left is what I have to get through. A mix of 3 1/2" wide and 6" wide pieces. That stack is about 3' from the wall...so a lot to go through. 

What the pine boards looked like before plaining. Very grimy with a solid layer dirt and dust built up over nearly a century. 

The same boards after a couple passes through the planer. Cleaned them right up! Unfortunately with almost a century of being in that shed has made them warp and swell very differently from one to another. So some pieces go through nice and smooth while others get pinched a little and require me to push or pull them. Thats what has created those vertical dark marks on the boards. Nothing a finish sander cant take care of. 

 "11th hour Inslee" is about the most appropriate name you can give him. lol I dont give any hope to him lifting it until the summer...at the earliest. 

Inslee will extend it. Do you really think he would lift it in the middle of winter?

@Peter B.

First question, the difference between a Duplex and a Townhouse: A duplex is two units, usually side-by-side but sometimes over-under, that sit on one parcel. They usually only have one set of utilities. So if you sell you are selling one building that has two units. A Townhouse is two units or more, side-by-side, that sit on SEPERATE parcels. This is also called a zero lot line house. Each unit has separate utilities, separate taxes, separate parcel numbers, etc. When sold, you can sell each one individually or as an entire row of Townhouses. The construction style is basically the same except for two major things. One being the completely separate utilities and the other is that a Townhouse will need a 2 hour fire wall between the units. Where as a duplex only needs one. When you only are building two units, the size and shape can be very similar btwn the two. Once you start building more than two Townhouses in a row, then you start to get the repetitive pattern that you are talking about. 

The "architecture fees" I am talking about did not actually occur. For a project this small the fees I mentioned are probably a bit high but not overly high for my area. As an architect myself I could've tried to pay myself for my work. Just how you paid a drafter for yours. But instead of apply that total to the loan, I decided to use that fee and put it in as "sweat equity" so I could keep my cash flow higher. For a residential loan I could not count my services as actual equity that would have counted towards the DP. Now, if I used a commercial loan, I could've counted that as equity towards the DP and that means I would've had to come up with $20k less cash. As I mentioned, I am doing things a bit differently because I am trying to learn and master the Architect as Developer business model. It doesn't seem like a lot of money for a small project like this but when I get to the point of designing and building large apartment buildings and mix-use buildings, that $20k can turn into $200k really quick. So that would be $200k cash I dont have to come up with. Or if I partner with an investor I can use that as my portion of the equity or collateral for the project instead of getting paid for my services. Again, cash I dont have to bring to the table. 

Most jurisdictions do not require an architects seal for residential designs that are 2 units or less (duplex or townhouse). Some do, so you have to double check where you build. If you get over 2 units then you will need a professionals seal. So, yes, you dont have to go to an architect for a duplex, you can go to a designer/drafter to get it done. The saying "You get what you paid for" applies here VERY much. But why would I do that? I have all the programs and way more knowledge about design than a drafter. 

As for not GC'ing it myself, its simple...I dont have the time. Both my wife and I are architects and work in the same firm. Our job can be an easy 40hr/wk but can jump to 60hr/wk without notice. Our positions also require a lot of site visits. I was overseeing a 60,000 sf medical clinic remodel during the 2 year construction phases and I was on site once a week, all day.  I am also finishing up my licensure tests that take up easily 20 hr/wk. So without this project I am working 60-80hr/wk. Then I have 2 kids and the house that take up any time left over. Plus with my GC being a consultant, and being cheaper than a typical GC (both in fees and in extra costs) there was not question that hiring it out was the cheapest and best option. I have the connections to plenty of consultants (PE,SE,CE,GC,etc) but not so much to the subs (framer, conc. layers, plumbers, etc). Architects usually dont have to much direct contact with the subs. Thats just how the contracts and business relations are set up...mostly for legal reasons. That and most small residential projects do not hire architects to take on the Construction Administration (CA) phase of the house building. That extra expense usually isnt justified unless its a really complex and expensive house. 

My goal is to GC my own projects eventually. Once my tests are behind me and have some relationships built with the subs directly, then I will start doing everything on my own. Once I get to that point the profit margins just jump up even more. So that is my goal, its just a little bit out. My GC does not do any of the payroll/invoices. So I will be doing all that. So that does add a couple hours a week as well as keep me well informed on whats happening. I do plan on doing some of the construction work myself. I have flipped houses and built a house from the ground up before. So I'm pretty well versed on what needs to happen. No expert, but enough to know what needs to happen and when its wrong.