Our Third Construction Draw
Over the last month we’ve accumulated a bunch of things that need to be paid for. Most of the major work done so far will be included in this (our third) draw on our construction loan… The foundations are in it, as well as excavation, survey and water proofing. Also in this draw are the final payment for our SIPs and our deposit for windows. After we submitted this draw request, our bank came back to us saying that they would not fund the entire requested amount for the windows and SIPs. These are invoiced items, and construction cannot continue without them. There is some more work that we can do for the time being (basement slab and framing of the first floor), but both are critical path items that would delay the completion of our house and cost us thousands of dollars. Additionally, they stated that they will not fund the rest of the line items for SIPs and windows until those items are complete. The way windows generally work however, is that you pay about half the total price up front to get the production underway, then the second half is due upon delivery… So one would think that the banks rules were set up by someone who doesn’t understand what it takes to build something. Fortunately, for now, we were able to absorb the overages in the windows and SIPs into our permits line item that we came in under budget on… And later when we need to pay for the rest of our windows, the SIPs should be in and since we have already completed payments on that, we should be able to pay for our windows out of the remainder of the line for our panels. But we shouldn’t have to do things like this. It occurred to us this morning that what we should have done is tack on an additional ten thousand or so onto our line item for footings and stemwalls so that we would have left over money to buffer things like this during the process.
In addition to all that, our bank has also taken the liberty of making some rather arbitrary changes to the construction budget that we submitted. The total budget is actually $300 more than what we requested which is fine, but some of the line items are different for reasons that were never explained to us and/or grouped in unexpected ways. They have actually just noticed this and made a couple of corrections to the budget. But its a little frustrating that they would be giving us a hard time with things like the windows when they have changed line item amounts without discussing them with us first.
A System Set up for Developers
As we have been working our way through the whole process of building our house, which we are now 13 months into, we have been realizing that construction loans are not there to help individuals build their own homes, they are there to help developers build homes to sell. This is evident in our current issue because were we doing this professionally, we would have had a large enough line of credit elsewhere that we could pay for our windows and not worry too much that our bank wouldn’t reimburse us until later… As regular people who have already sunk most of what we are worth into this project, we don’t have that kind of flexibility.
The other real big issue that we ran into early was that we were unable to get a loan just for our land, we had to get a combined lot and construction loan… And in order to secure that, we had to have permit ready plans that could be appraised ahead of closing. Were we in the business of building these homes, we might have had stock plans ready to jump on the opportunity to build here.
All together, there have been several moments that have been very difficult for us as homeowners-to-be to work through… And we’ve managed to work through them and keep progressing, but we definitely understand why this isn’t done every especially for first homes.
Since the last update there have been a couple things that have happened. We passed inspections for our plumbing and foundation drains, and this allowed us to back fill next to the foundation so that we can now go out and stand next to the house and get a better sense of what our yard is actually going to be like. In the process, we also got our soakage trench installed. Soakage trenches are an underground stormwater infiltration system that take stormwater from some place like your roof and direct it to a place in your yard where the water can soak into the ground and not into our combined storm/sanitary sewer thereby reducing the number of times that our sewer overflows into the Willamette River. Sized according to the simplified approach in the city of Portland’s stormwater management manual, we had a very very small required soakage trench, but during the permitting process they increased it to about ten feet long. So our backyard is now totally equipped to infiltrate tons of water.
The next thing that is going to happen is Dustin plans to be out to the house this weekend to trim away the excess on our foundation waterproofing so that we get more beautiful exposed concrete. It has sort of set up since installation so hopefully it doesn’t put up too much of a fight. Then soon we should be getting a slab in place, although our contractor has been having difficulties scheduling guys to come out and do it, then shortly thereafter the first floor gets framed out. We don’t have a set schedule for our panels yet but they should be roughly three weeks out, the windows however do have a schedule and they’re going to show up on October 7th.