Thursday, February 23, 2012

Nightmare on Wall Street

Today we are signing the papers for the permanent financing for both houses on 62nd Street. It has been an incredible nightmare getting financed.

We have done this project on a shoestring, using every available dime we could come up with, and it's been stressful. Our investments really are our houses - which turns out to be a good thing, since financial investments have been doing so poorly of late. We have a proven history of being able to buy and improve real estate, and make it profitable.

But the banks have not been lending money. Each bank we approached made us jump through 312 hoops, get appraisals, talk to multiple managers - and then they'd decide not to finance us, for a variety of reasons. We talked to other real estate investors, who all were having the same problem. It became more and more difficult. Our projected debt to income ratio, even with conservative estimates, makes 62nd Street have positive cash flow - something all the banks agreed to, but still would not finance us.

But finally, the Cooperative Credit Union in South Berkeley has decided to give us the financing we need. We're getting a construction loan so we can complete all the work on both houses, which will then convert to a regular 30 year fixed mortgage. The interest rate on the mortgage is not great by today's standards (5.25%) but there is no prepayment penalty, and they said we're free to refinance it any time (even before we take it).

So now, everything can happen. The foundation is already going in under the Delaney House. Once that's done, the new walls will be built, and the house lowered down onto them. The Cheney Cottage will get plumbing and heating, and we'll do the finish work on the woodwork, and patch and paint the plaster. We'll build a driveway, do landscaping, and build the new interiors for the first floor of the Delaney House. The new staircase, connecting the second an first floor, will be built, and the house will be twice as large as it was initially.

So we're now hoping to finish the Cheney Cottage in the Spring, and the Delaney House....this summer?

Meanwhile, we're continuing inside the Cheney Cottage unassisted. Jeannot has been helping with paint scraping, and the living room is almost done. Jimmy has finished all of the dining room, except for the built in cabinet and the doors, so there are only a couple more hours of work to do in there. Last weekend, Tom and I both worked on the stairway, scraping the paint off the railings, the balusters and the newel posts. It's a very meditative work to do: focusing on the small bits of paint, and working in a finite area, it gives you the opportunity to reflect on many things. The work isn't hard, but it's repetitive and, well, dull. But the results are fabulous.

I've rehung the bathroom door upstairs, and all the light fixtures are in. We hope to get our electrician to install the box outside, so I can hook up all the romex to the new box, and then we can finally get the electrical inspection and get rid of the ugly power pole in the front yard.

Will we finish this project before the new Bay Bridge opens? Stay tuned.

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