Diary of Surprises

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December 28, 2004 Engineering Burglary We’ve had a lot of trouble getting our project through the engineering process. When our Architect, Gregory La Vardera designed our home, he left it up to the modular home company to do the engineering. Our modular home builders prefer to use their own engineers because engineering and building a modular home is a bit different than a site built home. The engineers that we hired have been really swamped with work and every time I called the factory for a progress report, he told me that the engineers "had a phone in one hand and a bottle of Valium in the other." Just as they were about to start on our plans, the engineering office was broken into and their server was stolen. Even though nothing from our project was lost due to theft, we’ve had to endure a two-week delay as the engineers recovered from the loss of previous and more urgent projects. The holiday season was also a factor in the delay since some of the engineering staff took time off from work (imagine that!) Our plans are likely to be completed at the end of this week but I am prepared for it to take longer. I was told yesterday that the engineers are actively working on our plans and I hope to get a more specific update tomorrow.

December 8, 2004 Title 24 Compliance

The engineering for our house started this week and as planned, we submitted our project to a company that processes title24 reports. At the same time the factory was finalizing our water heater and HVAC system so we would have the appropriate information to forward to the title 24 engineers. In doing so, they discovered a problem with our plans; here’s the story: One of the goals for our house is for 100% of our energy needs to be provided by solar panels. Our plan is to finance this a few months after we receive our certificate of occupancy. With this in mind, we instructed the factory to install an electric water heater and furnace. Our planned washer/dryer combo as well as our range is electric. We wanted to avoid using any natural gas in the house because it would decrease the cost-effective benefit of financing a whole house solar system, especially since we are planning on installing the solar panels shortly. Besides, natural gas prices are very high these days… The factory called me this Friday and informed me that if we installed an electric (tankless) water heater and an electric furnace, we would most likely flunk the title 24 report. They never had anyone request an electric water heater or furnace in their many years of building. The further they looked into electric furnaces and water heaters, the more troublesome they started to look. The State of California highly discourages the use of electricity for space and water heating. The factory recommended that we start the title 24 report without having any information about the heating, cooling and water heating. They suggested that the title 24 engineer could help us find an all-electric solution for a little extra money. David found a company that could do the title 24 for only $150, Title 24 Express I believe they have the lowest prices of any company on the internet. After speaking with the engineer, who seemed very knowledgeable, I submitted our project. He agreed to help the factory find a solution for us. In fact, he suggested it before I asked… for only an extra $15. His opinion was that an electric water heater and furnace would definately cause us to flunk the title 24 requirements. We mulled it over the weekend and decided to look into solar water heater/radiant floor units. However, doing this would decrease the cost-effective benefit of our forced cold air unit. To make a looooong story short, we discovered today that we will pass the title 24 report if we install radiant heating that works in consort with our water heater. We will also have to do one of two things: 1) Hook up the electric on-demand water heater to a supplemental solar water heater at the factory 2) Use evaporative cooling instead of refrigerated air. We decided to go with the evaporative cooler, also known as a swamp cooler. I’ve heard so many derogatory things about “swamp coolers”; that they make your home humid and that you have to refill them often. We live in a very dry climate and I hear there is a new generation of “swamp coolers” that work very well with little maintenance, so I’m keeping my fingers crossed.

Oct 29, 2004 Foundation Problems

This is a major problem that has cropped up as a result of unclear terminology regarding manufactured/mobile and modular homes. We were intending to use a foundation system called Fasttrack Anchorpanel that seemed perfect for our site. I've gradually taken over all aspects of this project because David works in the day, sometimes at night too and he simply doesn't have the time. David originally contacted the manufacturer and the contractor of this foundation system, so I didn't know the details. Also, I'm ashamed to admit that I didn't know too much about how foundation systems work for modular homes. For instance, I didn't know that the interior supports are permanent, not temporary. Another LiveModernite contacted me about this foundation system after he was told by the manufacturer that it was most cost effective for HUD not UBC homes. At the time, I was not very clear about the difference between a HUD and UBC home. One of the things that happens with a HUD compliant home is that they ship the house with a steel chassis underneath the structure. Instead of craning it in place, they just roll the modules in position with the chassis. So one of Fasttrack's selling points is that you can keep that steel chassis in place for the interior supports and also save money on craning costs. Unfortunately, the stamp that I have on the technical drawings is for HUD, not UBC. The engineer can provide me with the UBC stamp, but our costs for the foundation will no doubt run higher. When we received the quote from the foundation contractor, I think they were under the assumption that it was a HUD/manufactured home. I've been trying to reach the foundation contractor for three days with no luck. Also, I just realized about an hour ago that all the reading we did about foundation systems was for manufactured homes. This is something I should have noticed right off the bat. I really feel stupid about this because I knew that the distinction between the two is very important to make. I thought I was careful to explain that we're building a modular, not manufactured home to all parties as well. I suppose if I really knew the difference between UBC and HUD earlier, it might have been clearer to people in the industry. I just remembered a conversation that I had with a prospective general contractor who said that local design guidelines would not affect us because we're building a HUD home, I didn't pay much attention to this. Lesson learned, I just hope our foundation costs won't run too much higher with the UBC specifications. Fortunately, the people who are building our modular home are easy to reach and very helpful too. I contacted them right away and they were very good about explaining a lot of this stuff to me and pointing me in the right direction. Also, one of the services their engineer provides is to find the most affordable foundation for your soil/site requirements. Fasttrack Anchorpanel may actually be the most affordable in the end because our footings need to be 6' deep and 2'4" above ground. This would normally result in an outrageously expensive foundation. Fasttrack can make their perimeter panels up to 8' high and it would be less expensive than the traditional concrete and rebar footings. In the meantime, I'm going to be doing more research for more modular home foundation systems over the weekend while everyone is out. I'm starting to hate weekends because I can't get much work done on the house...

More Insurance Problems

I received our insurance policy info in the mail today and it clearly states: Manufactured/Mobile Home Policy I am going to have to sort this out at the beginning of next week.

First Draft of Shop Drawings

I received the first draft of the shop drawings today and there are a few inaccuracies included. I know it's a first draft and it is not supposed to be perfect, but I got a little excited when I saw that the flat roof section was slanted. All in all, the drawings are about 90% there and all I need to do is indicate where the problems are. Our modular home builder was really good about getting these drawings to us so quickly, so we have plenty of time to make changes.

Escrow still hasn't closed

We are getting very close to closing, however. The final papers were signed today and the seller should have his remaining money by Monday or Tuesday.

October 14, 2004 Flood Insurance

I can’t believe it’s taken us two weeks to finally sort this out; I’m writing this entry on the 27th. We have a property that is located in a 100-year flood plain according to Los Angeles County flood maps, which are most recent. Our lender is requiring that we have flood insurance (along with a course-of-construction loan and homeowner’s) before they close escrow. According to FEMA’s Flood Insurance Rate Map (FIRM) our property is in an undetermined area of the flood plain or floodway. FEMA's map is the tool insurance companies use to assess flood risk. In between the white lines in the above FEMA map designates the flood right-of-way or undetermined. In between the black lines in the above county map designates the flood right-of way First of all, we couldn’t find anyone who specialized in a course-of-construction loan for a modular home and who knew about flood insurance. My parents, who both work in insurance, were able to put us in touch with a really knowledgeable guy who would be able to write the policy. When he was finally able to find us a quote, it was exorbitant and according to my parents, it was higher than what most businesses pay for flood insurance. He was using the FEMA map to price our insurance and according to FEMA, we might be building in a seasonal riverbed. In the end, he was able to sort it out and get us down to a manageable premium. The trouble is that the uncertainty about the flood insurance caused our escrow company (who are lazy to begin with) to slack off on our file. The lender didn’t want to move unless we had the insurance; the escrow company wouldn’t move until we had the money; and the insurance guy wouldn’t move until we had the a paper from the loan company that's required in California (our lender is in Minneapolis and they aren't accustomed to this procedure). So, we’re still in escrow and we’ve paid for the insurance and we’re just waiting for the escrow people to move and set a date…

September 5, 2004 New Local Architectural Standards and the Water Fee

After making a routine call to Regional Planning, I found out that there was a draft of a “Community Standards District Building Code” that would affect our jurisdiction. The draft limited new construction to Mediterranean, Spanish and Mission styles. It would be approved in as little as a month, so at least I found out soon enough to submit our plans before it would take effect. The clerk at Regional Planning (zoning) was very understanding and gave me a verbal okay that day. I just needed to wait until we were out of escrow to submit our plans. The surprise about the water was simply that we found out that it was going to cost $15,000 for the meter/fees and we budgeted only $5,000.

September 22, 2004 Product Issues

After we settled the issue with the land, we were ready to start the contract process with our chosen modern prefab product. I was very discouraged when I discovered that the anticipated price for our modular home would be approximately 25% higher in California and our shipping cost would go up as well. I did a lot of calculations of conventional construction versus this particular modular product and it did seem as though I was onto a good thing. The company did a very good job of making the construction process seem as though it would be very simple. I think it is so funny when I remember David saying, “We could do this every other year, get equity, until finally we owned our house free and clear.” We had a 40-day escrow and in order for our loan company to pay off the land, they needed to see our detailed construction budget with a sworn statement. They also needed the floor plan with an estimate. The 25% increase made the house unaffordable for us. I know when one takes a first glance at per-square-foot costs it doesn’t really sink in that an extra $25 per-square-foot really is a lot of money when you multiply that by 1500 or 2000. If you’re on a tight budget, like we are, it’s enough to break the bank. At this point, we had already sunk $5000 on the project and we really wanted to find a way to make it work. A few weeks before, David and I drew up a floor plan that we really liked. It seemed that I could find a modular home company on our own who could build a truly custom house based on our floor plan. It took me a few days of being on the phone and the Internet until I was finally able to find a company who was willing to do it. I am not an architect, and I knew that our plan needed fixing and embellishing to make it practical. I had done a fair amount of searching for companies and architects on LiveModern and FabPrefab and David and I really liked all of Gregory La Vardera’s designs. What we really wanted to begin with was to build something from one of his stock plans, but we later decided that we weren’t cut out for site-built construction. We called him to see if he could develop our plan in a presentable form for the factory, that night he sent us the following sketch: First Sketch We were so impressed with this little sketch and it seems so silly now that we have all these beautiful drawings. David and I have terrible drawing skills and we attempted to draw something like this earlier, so it was truly amazing to us to see how quickly he was able to do it. Even though we were disappointed that we couldn’t afford the first product, we now have a house design that we like a lot more.

September 17, 2004 The Guesthouse and the Percolation Testing

Looking for land was hard because once we found a parcel we liked, we had to research all the particulars about the land before we made an offer. All of the questions could only be answered by hours of driving around and checking with the county maps and going online to the L.A. Assessor's Parcel Search We were very relieved once our offer was accepted on the two parcels because we could start planning the house and budget more accurately. The seller had ten parcels that he was listing outside of the MLS. All parcels were vacant except one that had a small house and an even smaller guesthouse that were built in the 1930s. I know listing outside of the MLS is a little unusual, but our realtor is also his agent and she had lots of clients that were waiting to buy property. This way the seller wouldn’t have to pay fees for two realtors, our realtor could find properties for her clients and the buyers would be able to get first shot at some land. The seller met David on the property with a counteroffer that had been drafted by his attorney. There was a minor amendment that released him from removing the tiki bar. During this informal meeting David, our realtor and the seller noticed that the guesthouse was awfully close to the back of our properties and that it may even be on the lots we were planning to buy. parcels diagram When our realtor went back to her office to fax the counteroffer to the escrow office, she noticed that the seller had not signed the contract. She called him up to get a faxed signature, but when she was able to reach him he told her “David and I agreed that we would have the properties surveyed before we signed the contract.” I guess sometime during the conversation the seller said, “Yeah, that looks close we should have it surveyed.” David agreed, of course, but he had no idea that the seller was implying that the survey would hold up the contract. So, we still weren’t in escrow and even worse, we were going to have to pay for the survey before we were in escrow. Our realtor, who has such a generous nature, said that she would pay for the survey just to help us get the deal through. There was no way we were going to allow her to pay for the survey because she had paid for part of the percolation test on the first property. One thing that she did though, was organize a surveyor and a percolation test for our property and another couples’ on the same day. The seller would be there all day so he could sign the counteroffer and we would be in escrow by the end of that day. Supposedly, the surveyor would come first thing in the morning, survey our lots first, and then the perc. guy would test our lots after we had a signed contract. It took the percolation guys only a few hours to successfully percolate the other couples’ lots and by the time they brought the backhoe over to our properties the surveyor had not made a determination regarding the guesthouse. I had made chitchat with the seller while we were waiting and he seemed like a nice guy. I told him that David and I agreed if the guesthouse encroached on our lots that we deed an easement to him to get the sale through. Anyway, the perc. guy walked up to me and said, “So, you’re next...” I said, “Well, we haven’t resolved the issue with the guesthouse.” The perc. guy looked at the preliminary corners that we made and said, “I think you guys are okay, it’ll probably just miss the house.” I looked at the seller who was just about to walk away and I said, “what should I do?” He said, “Well, if you’re willing to accommodate me if the house is over, then there’s no problem… I want this sale to go through.” I am really not the type of person to gamble, but seeing that backhoe sitting there ready to percolate our lots was tempting. At this point, I was so tired of waiting around for something to happen with these properties and I made an executive decision to authorize the percolation test without being in escrow. I think I looked a little helpless that day because I brought Walter with me in his sling, and I was pacing around nervously. Since I’ve been organizing this project (David works all day), I’ve been very conscientious about being prepared and knowledgeable when dealing with men in construction. I know it’s probably not so prevalent nowadays, but there are a few instances where I felt like I had to really overcome a prejudice and show that I knew what I was doing. I think the perc. guy was trying to help me out by pushing me into a decision. The seller sensed that I was uneasy about the situation and as they were making the first dig with the backhoe he asked me, “How does it feel to see the beginnings of your house?” I thought that was a very nice and subtle way to reassure me. I had to leave soon after that because Walter was very antsy and hungry. We came back in a few hours while the surveyor was packing up. I pulled up next to him and asked him about the results. He kind of tormented me and waited to answer until he lit his cigar (cigars take a long time to light!) Anyway the guesthouse ended up being 6” from the property line with the eave 1” from the line. I saw the seller walking up and he seemed pleased, he was waiting for our realtor to show up to sign the counteroffer. I was so excited I nearly forgot to ask about the percolation test. It passed, of course. When I drove home, I was really worried that since we paid money to successfully survey and percolate a stranger's lot that he would renege on the deal. I didn’t hear from our realtor until 3 hours later who finally said that the lots were in escrow, and yes, she had to talk him out of changing his mind because he felt like he was letting the properties go at too low of a price. I will never make a risky decision like that again, but I was glad I learned a lesson without losing anything.

September 2004 New Parcel(s), a good surprise

Obviously we were devastated after we failed the percolation test. We thought that we had no new leads and we were ready to give the project a rest. Our realtor assured us that something better was out there for us. Although David left the perc. test early, our realtor stuck around and convinced the perc. guy to visit some new listings a block away. He gave her a preliminary thumbs-up and said that it was likely to pass because it was near a creek bed (a dry floodway) and the soil looked very sandy. She gave us the APNs (assessor's parcel numbers) for the properties she had in mind for us. She was selling an estate of ten contiguous parcels. Some of the properties in the group were not buildable because zoning requirements dicatate that leach lines for a septic system need to be 50 feet from a floodway. So, if a parcel is only 50' wide but next to a floodway it's unbuildable. Our realtor decided to group the few junk properties in the estate with a viable property. The land sale was for two properties and we took a look at it the following weekend.

We were totally unimpressed with the property at first. First of all, it was $30,000 more than the first property. Second, it was in a 100 year flood plain. Lastly, (I know this is superficial) when we first looked at the property, we were greeted by hippies who were living in a tent on the estate. Also, there were remnants all over the property of some huge rager. There was a pit where a whole pig was roasted, leis everywhere, a limbo pole and a permanent tiki bar. I was so upset that this was our only lead that when I got back in the car I said something so immature, Do the hippies come with the property? The scanario does seem humorous to me now.

We took a second look a few days later and we liked it much better, after the the third look we made an offer. The tiki bar was smack dab in the middle of our building pad so it would have to be removed. The good news was that it was not going to be much trouble. I guess many of the locals have a fondness for the tiki bar, it was really easy to find someone who wanted to take it off our hands and relocate it somewhere else.

August 20, 2004 Percolation Test Fails

We managed to secure a nice corner lot for $60,000. It had dropped out of escrow several times based on the belief that it had excessive setbacks. Setbacks refer to how far you can place a structure from the property line and it determines the size of the building pad. David and I discovered that original calculations failed to take in account 10' for the radius (corner lots have curved angles). In addition, the series of buyers before us didn't know very much about L.A. County zoning codes and they didn't know that reverse corner lots have different setbacks. So even though the lot we wanted was in escrow, the buyer desperately wanted out of the deal because the dept. of zoning said the building pad was too small and the lot was unbuildable. We locked in the deal and on the first day of escrow, we verified with zoning our new setbacks. It was no problem once the mistakes were explained. The next step was to get a percolation test. A percolation test assesses the drainage qualities of the soil as well as the depth of the water table. This determines the feasibility of a septic tank's leach field. This test is not needed for properties that have public sewage access. Everyone in our town is on a private sewage system, so this is the first and most critical step if you want to build. The test is performed during escrow and it costs $2000 whether or not you pass. No matter what, if you're trying to buy land in unincorporated L.A. County and it will need private sewage or water, you'll have to take a financial gamble to determine if you can build on the land. By the way, determining if your site can support a well is much more expensive, around $10,000-$14,000. We didn't pass the percolation test. In fact, the guy we hired, self-named "der Perkmeister" didn't get very far that day. He stopped the test early because we had really horrible soil conditions. There was a lot of clay (which is expansive and doesn't drain well) as well as a high water table. Even though they stopped the test early, we had to pay nearly the full price. Above is a photo of the property. July 2004 Finding Land We first started looking for land around this time. We were also in the process of looking for construction loans, which surprisingly was pretty much hassle free. The first aspect of surprise was finding out how scarce and expensive land really was. Our first estimate for land was $35,000 (we really didn't know the market). Later we went up to $45K, then 50, then 60 and from there it jumped up to $90,000. This final price is what we ended up paying. We ended up with a third of an acre in an unincorporated area of L.A. County. It was a prime price for a prime spot and we're happy because we found a way to make it fit in our budget. The second surprise was finding out how hard it is to get a realtor to call you back! Nobody really seemed to want to deal with land sales. That all changed when we got a referral from a local realtor who is a land specialist, has lived in our little town for 20+ years, loves modern design (her father was mid-century modern designer Bill Curry), has all the best land listings and loves to help young families. We really lucked out when we found her. The third surprise was finding out how greedy people are over land. I was very naiive and assumed that most people who bought land were like David and me. Most of the people we were competing with were developers who were looking for a profit. Most of these developers have cutthroat realtors who will do anything to have their client make the deal. The area where we're building has become very competitive and we really wanted to stay in this area so we had to deal with it. It took a lot of driving around and checking setbacks with L.A. County Zoning with parcels that were listed on the MLS. It seemed like whenever I went to the counter at the zoning dept. the guy would say something disparaging like, "that's a popular lot today" or "a guy just came in with plans for that parcel."

February/March 2004 Credit Repairs

During these months David and I got really serious about improving our credit. Along the way, there were many delays with credit reporting agencies (especially Trans Union!) while were trying to clean up our credit reports. Any delay could take up to 6 weeks to rectify. Each time it happened we felt like it was pushing us further from our goal of owning our own home. We enlisted the help of Privacy Guard This is a credit checking service which allowed us to check our credit reports everyday and get something called a "FAKO" which is an estimated FICO. The biggest shock to us during this period was seeing how much different the FAKO and FICO could be. Here's a story during this time that may convey how frustrating and tedious it was to improve our credit: During these first months David also refinanced his viola payments to a credit union (we're big fans of credit unions). Of course, the lien holder required that the instrument needed to be insured (it was remiss of us to not have it insured to begin with). So we called up our insurance policy holder to have them add the new instrument. Well, they required a credit check for some reason, ran our credit without asking and of course, we were not approved. We thought we would not be able to secure the credit union loan and refinancing his viola payment was crucial to our long-term plans. It was also devastating to us because we could not afford to incur any nicks in our credit and we were really saving up our inquiries (too many credit inquiries lowers your FICO). With the help of The Fair Credit Reporting Act we were able to erase this inquiry because it was not authorized. Later on, the insurance company got rid of the credit requirement and we updated our insurance. I think this is the perfect example of why it is so important to know about credit reporting, we were able to anticipate a future problem and changed it immediately.