Floorplans!

I realized that something we haven't shared are floorplans - one of the most exciting parts of the process!

While you are constrained by certain dimensions and codes, you still have a lot of flexibility when you are doing a gut renovation to decide where you want everything. It's very exciting and empowering to design your home! However, you also have to decide where you want everything, so there is element of stress involved as well. Making decisions isn't always easy!

One thing I'm thankful for is the good taste of my husband. I think the fact that I'm not very picky and generally like his style has made this process a lot easier than it might be for other couples. I generally let him lead the design and offer suggestions where I have a strong opinion.

The first thing we both agreed on was that we wanted an open floor plan. We want everything to have clean lines. We want Modern yet Classic at the same time.

I think the biggest challenges were deciding sizes of bathrooms, bedrooms, and closets.

We were asked by a lot of people why we didn't design a separate apartment downstairs. Remember, this was a two-family property already, but we wanted to convert it into a one-family. "Why not rent out the space?" a lot of people asked.

While there is definitely income potential to at least offset the mortgage payments, this is also our dream home and where we want to raise our family. We do not want to share our backyard or be landlords in our own home. Others probably would have an opposite stance and think about the money involved, and while we are counting every dollar as well, we are happy with our decision to keep this place a one family.

Without further ado, please find our current plans of the house below. Guess which closet is mine? :)

Gut Renovation Inspiration

I can't admit that it was the actual reason for us to take the leap to do a gut renovation, however I will readily admit that we spent (and still spend!) hours and hours, probably years, watching a variety of HGTV and DIY network programs that inspire us to continue with our project in Brooklyn.

While we are inspired, most of these shows also leave us frustrated.

It's no fault of the networks, since we assume they are trying to capture the average audience, but frustration is usually immediate with prices. I understand that NYC is an expensive place to live but there are some issues when we watch the show:

- Home prices are often the amount of our down payment. Yes, this is the why most NYCers don't purchase, but watching someone buy a five thousand square foot luxury home for $300k with no indication of income is frustrating. For us years of working 18+ hours a day allowed us to earn downpayment for a Brooklyn home... $300k though? That would be maybe a two-hour commute from this awesome city and something not in our consideration.

- Permits are at significantly high prices for almost everything in NYC except for cosmetic changes like wall paint color. Want to move your bathroom? Fah-getta-bout-it.

- Unless you are as fortunate as us to buy an entire building (rare) in NYC, then you also have to spend time and money to have the board of the condo/coop building to approve your plans

We are so early on in our construction but remain scared reading other experiences. Please reach out with comments- both if you have questions or went through similar experiences.

Second Opinions: Be Aware of Your Engineering Requests

The irony of this this post is that I come from a family of engineers. I never thought that I would complain about them or their intent, however after recent experience I do have to share the following disclaimers:

Do not automatically trust the opinion of an engineer.

This is probably common sense, or should be, but again, this is a blog written by novices.

Recently we were researching with our contractor whether or not it would be necessary for us to reinforce the existing foundation of our house, considering that it was 100 years old and we would be adding an additional story.

Our initial meeting with the engineer was pre-closure with the bank. As previously mentioned, our house purchase was through a 203k loan, and being such we had to have several inspections of the home, most importantly to prove that the house was capable of withstanding a gut renovation.

At this time, we were told with a signed paper that the house was indeed capable to withstand extensive renovation.

Flash forward four months later when we start to consider whether we will need any structural improvement. We consult the same engineer and suddenly receive a very different opinion. Suddenly we need to consult him for much more detailed plans and decide to dig into our foundation to replace pilings that 'might' be deteriorated to a cost of close to $45k.

Should we?

Shouldn't we?

We are not engineers. We are first-time homeowners. We have barely been responsible for the gas and electric cost at our previous residences so how are we supposed to know what should be paid in a situation like this?

In this type of situation we actually relied heavily upon on our contractor and his experience. We were readily told how manipulative the engineers' requests could be - not of our particular engineer but in general. And again, being from a family of engineers I mean no offense of anyone in particular.

Still I would like to point out that it is a good idea to get an engineer to inspect your home if you plan to do extensive renovation.

In our personal experience, certain signs (for example our floors were slanted left to right, but we had structure issues from front to back) are not imminent proof that you need structural work.

However, to date we have decided not to do any additional exploratory work of the wood pilings in our foundation. I hope that this will not be a regret of ours, but I have to admit, there is much more ahead of us to be concerned with...

Financing and FHA 203k Loans

 Like many others, in order to purchase our home, we needed to finance a portion of it. We had saved very well in our preparation of buying a home, but we were also cognizant of the many expenses ahead of us.

After doing a lot of research, and reading many different experiences, we decided to finance with a 203(k) loan, also known as a “Rehab Loan”. For more information, here is the official website:

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k

Basically, with a 203(k), you obtain loan larger than your traditional mortgage, because you are also financing the cost of renovating your home. It’s not as straightforward as your typical mortgage, and there is a lot of paperwork involved. It also isn’t as simple as closing on your home and getting a big fat check for the renovations needed.

The money for the renovations is held in escrow, and there is a detailed list of specific items for which the money is reserved. For example $X,XXX is specifically for floors, or plumbing, or demolition/clean-up, etc. An HUD consultant visits the home and does a thorough documented inspection before closing in order to produce the “Work Write-Up” (WWU) to detail what repairs will take place and at what cost.

Once repairs/renovations are underway, the same HUD consultant returns periodically to do further inspections. When progress is made, you receive payment from the bank from the escrow account through the draw process. A small portion of money is held until the end of the renovation, when they sign off that everything is complete. At that point, the money is either released to you in order to complete payment for the balance of the renovation cost. Any excess (seriously?) would be applied to the principal of the loan.

Seems easy, right? Not quite. In order to close on the loan, a lot of decisions and commitments need to be made. There are things that you wouldn’t have even thought of at this point in the process with a normal mortgage, even if you intended to make renovations to your home. For example, you need an architect and a contractor.

The contractor needs to be officially approved by the bank in order to close on the loan. They need to agree to the WWU and sign it in addition to a number of other forms and releases. They need to prove their licensing, their financial ability to complete the work (remember, funds are not release until progress/completion), and a number of other requirements. You can change your contractor after closing, but to do so is another time consuming and challenging process.

The other tricky requirement is timeline. The bank requires you to complete the renovations in six-months. For a full gut renovation, that is a large task! Additionally, we are in New York City. The Department of Buildings (DOB) here is strict and attentive. You need permits for nearly every type of job, and you have limitations to when work can be done. Since the type of permits we need could take months to be approved, we have already spoken to our consultant about extensions to the six-month requirement. We have been told not to worry about it. Delays that are out of our control are not penalized.

In the end, we were eventually approved and the bank was happy to close. However, approval from the bank is only one part of the closing process…