Since 2004, when I moved from 3BR/2BA house in Lubbock (where square footage is not a premium), to a slightly smaller (but still large) apartment in Houston, I have been slowly downsizing and decreasing stuff. After that first Houston apartment, I lived in a house similar in size to the apartment, then I moved to an 1,200 sq ft apartment, then a 1,000, then a 637 sq ft apartment. I liked apartment living and never felt squeezed into the increasingly smaller spaces. In fact, I felt more and more comfortable the less stuff I had and the smaller my living spaces got! I’m a minimalist by nature anyway. And I got better and better views!
At some point, I began to take more notice of some things I did not like about apartment living. Stephanie had nowhere to park when she came to visit. We’d drop her car or mine at my office garage and leave it all weekend. Thankfully, my firm paid for that parking space so I could use it all I wanted. Parking is at a premium in high rise apartments – especially the older ones. There was no yard or garage to piddle around in. In my last small apartment, I did not have a washer and dryer. There was a shared laundry room in the building. That actually worked out just fine. A single guy doesn’t have to do a whole lot of laundry – whites, not whites, and dry cleaners. I’d go down and wash and dry two loads on Sunday evening, take dry cleaning Monday morning, pick it up Monday night, and be good for a week. In any event, I started thinking more and more about a house. Besides the old adage is sometimes true – a house can be great investment – so long as you can afford said house. Over the course of a year or so, my thinking crystalized around wanting to build a small house – not much larger than my 637 sq ft apartment.
HURDLE 1 – there are almost no single family homes for sale that size. The ones that are available are very old and mostly falling apart.
After some looking, I determined that my best bet was to buy a lot and have just the house I wanted built for me. I know a great realtor, who has also become a trusted friend over the years. She’s helped me buy and sell several properties in Houston and is my go to person for residential stuff. Plus, she’s just a really genuine, kind and intelligent person. She started helping me investigate lots near downtown. I focussed on areas near downtown and near where the new light rail was going in. We found a 5,000 square foot lot. I got a great deal because the seller wanted to sell to someone who wanted to live in the neighborhood (as opposed to a developer).
HURDLE 2 – builders, bankers, appraisers, etc. have no idea what to do when you want to build an abnormal house.
I had some ideas of what I wanted and started calling around to builders I found by typing “Houston custom home builders” into Google. They sounded interested when I told them I paid cash for the lot, already pretty much knew what I wanted, and was ready to get started on construction. Then they sounded not interested and quickly got off the phone when I got to the part where I said I wanted something around 700 square feet. Their business model just isn’t profitable enough on homes that are less than 2,000 square feet or so. Some of them did stay on the phone long enough to tell me that I would ruin my resale value building a house that small and that it was a bad idea.
One day it dawned on me that what I was envisioning was something that most folks would call a garage apartment if it was behind a 3BR/2BA house. Garage apartments are all over central Houston. I searched for “Houston Garage Apartments” and found my builder, Mike Shelton. His company, Harvard Heights Construction, specializes in garage apartments. He always does a video walk through at the end of each job. Here is the video of my place. You can see a bunch of his other work here. I called and asked him if he could build me a garage apartment that was not behind anything. He paused and said “yeah, I don’t see why not.” We met soon after and then I sent him my rough (very rough, almost child-like) drawings of what I wanted. He converted my “plans” into actual usable plans. For instance, he fixed the fact that I had drawn several doors that would not have room to open, that my toilet placement did not allow room for it to be used by someone with actual legs, and that my main staircase was drawn to be only about 2 feet wide (code requires 4′). We did lots of back and forth and there was some movement over time toward making it bigger. One day, I decided that I was going back to what I wanted. We ended up with a 26′ x 26′ apartment over a garage of the same size. Mike and his team were really great to work with. We had some frustrations with each other along the way, but they were professional and delivered a final product I am very happy with. We ended up over budget, but that is largely due to things no one could have seen coming and me adding on some things here and there.
While all the locating a builder and designing was going on, I decided to split my lot into two tax parcels and only build on one and keep the other for resale or for building an investment property on some day. That process was pretty painless, although it took longer than it should have. I ended up with two lots side by side – each 50′ x 50′. Because the lot was on a corner, each new lot had access directly to a street for a future driveway. Because I knew I was building something pretty small, I knew I would have room for my house and a little yard even with such a small lot.
Next, I started hunting bankers for my construction loan. I’ve worked as a banker and represented bankers doing construction deals for close to 20 years total. I know exactly how the system works and I knew this was coming. Construction loans are time consuming and risky for banks because of the monitoring they take and because of the status of the collateral. Each time your builder needs to get paid for part of the work, the bank wants to know that the things being paid for with the money going out its door have actually been done. They send an inspector out (which you have to pay for). These loans are risky for two main reasons. First, the collateral can drop in value quickly due to market fluctuations. Second, at any given time, the bank has loaned a lot of money that has been converted into concrete, wood, paint, etc., but the bank’s collateral is half-finished. A half finished house is virtually unusable without them pouring more money into it. If your borrower is crazy and decides to quit his job and go to Ecuador to learn Spanish for two months without making arrangements to pay his mortgage ;-), the bank probably has to put more money into the house before it can sell it to recoup its losses. Bankers hate to have to throw good money after a bad loan.
Big firm lawyers are target customers for banks. They assume we all have a lot of money and steady jobs so they constantly send flyers and emails touting their great home loan products – “painless, quick, great terms, we’ll come to your office with the papers to sign”, etc. When you call the number on these flyers, they get excited. They start filling out the credit application. You can hear their pens feverishly scratching out notes. Then when you tell them the total amount you think you need to borrow for a project like mine, the wind goes out of their sails. They just don’t want to mess with the risk and the time for the small amount of interest they’ll make on a small construction loan that will only be in existence for 12 months or so. I did end up finding a great banker at a small bank who liked my idea and also owned some rental properties near where I was building. He knew the neighborhood was going up in value. Once I found him, we got the loan paperwork done with relatively little wailing and gnashing of teeth.
It was time to build (or time to spend weeks trying to get the permits from the City).
HURDLE 3 – People in the city permitting office are good at checking boxes. They are not good at understanding things they have not seen before – like a garage apartment, that’s not behind house, that needs its own gas, water and electricity hookups. City workers also all have different readings of the city building codes so you get a different answer depending on who you ask. Also, the City does not always know where its own water and sewer lines are.
My builder stuck with it and got them to understand, and worked for a long time to find the correct water and sewer lines (that happened to be on the exact opposite side of the lot from where the City said they were). You know what was where the City told our plumber to dig and connect to the water line? A large natural gas pipeline. After scaring our plumbers to death, and getting Centerpoint Gas and the City all out there (they come in a big rush when a hole digger dings his shovel against a major gas transmission line), the guy from the City said “oh yeah, we were going to put our water line there, but then we learned there was a big ass natural gas pipeline and we didn’t want to dig anywhere near that – it’s too dangerous – I bet your water and sewer lines are on the other side of your lot.” This was not the last time I would mumble to myself “if I did my job like that I would get fired.”
Things I learned from this NTM:
- If a building project is delayed it is highly likely it was due to some factor that was not in your contractor’s control. Here are just a few examples:
- Do you see the nice new sod in the ditch in the last picture above? Do you see how it looks like the area inside the fence has no sod? We had our final inspection and the inspector said that my ditch was too muddy and that it needed to be covered in sod. He did not appreciate my argument that the very nature of a drainage ditch is to be muddy. So, we put some sod down in the ditch. We called for re-inspection then waited another day and then another inspector came by to redo the final inspection and said “you can’t have all that grass in the ditch because it prevents water from flowing.” He didn’t care that another guy from his office was the one who told us to put it there. My yard was already full of sod so I told my builder to use the sod from my ditch on another job. He had to get workers back to my house to load it up and cart it away. We called and then waited another day and a third inspector came by and said “you have to sod the ditch.” He didn’t care what the other two guys from his office had already told us. We asked him if he would please wait. Then me, my contractor, and his right hand woman Susan (who is absolutely great to work with), pulled the sod out of the yard and tossed it in the ditch in kind of an orderly pattern. He watched us work from his air conditioned truck and then got out and said “looks good. I’ll have your final approval in the computer this afternoon.” If I hadn’t been there all three times, I would have been tempted to wonder why my builder didn’t know whether or not sod was required in the ditch, but how could he? The inspectors can’t even know if it’s really required or not. This kind of thing happened over and over again.
- I ordered my wood flooring from Lumber Liquidators. The flooring I wanted was in their warehouse in Oklahoma. I paid in advance, and asked several times to confirm arrival date and to confirm that it would be unloaded and carried upstairs into the living space. Wood flooring has to acclimatize in the space where it will be installed for a few days before it can be installed. The day came for delivery and my builder had his folks on standby to start laying the floor exactly two days later. No shipment. I called Lumber Liquidators. No one called me back. I called again a few hours later. This time, the manager got on the phone and said that Oklahoma said the flooring had been put on the truck the day before, but the truck had arrived that morning and my stuff wasn’t there. He finally said, “well, I guess we lost your flooring.” He said he would order more from the El Paso location and it would be here in three days. That’s a minimum five day delay since you have to wait two days after it gets here before you can work with it. Of course, in situations like this, it is usually a longer delay because the workers move on to another job and your job goes back on the bottom of their to-do list. Three days later, I stopped by the house after work and Susan was helping two other workers carry the flooring to the my second floor. I asked why Lumber Liquidators wasn’t doing it and she said the truck driver said “we never do that” and drove away.
- Life is easier with less stuff and my place has way too many cabinets. Despite my clinging to the notion that I was going to build the house that I wanted and needed (and not something bigger than I wanted), I forgot to give up the old notion that you should basically put in as many cabinets as you can in the kitchen and bathtub. Once fully moved in, I was using less than half my cabinet space. Also, if I still had every item of clothing I’ve ever owned in my life, I don’t think I could fill up the closet.
- I love my neighborhood. My neighbors are mostly native Spanish speakers and we smile and wave at each other and stop and talk when we are outside at the same time. The man who mows my yard is my neighbor. His teenage daughter translates for us if we have to talk about anything complicated. One time an unexpected rain storm hit and I was running some errands nearby. One of my neighbors called me to let me know that my bedroom window was open and offered to take his ladder over and see if he could get it mostly shut from the outside for me. Really nice folks.The street is quiet and if I look out my window after 10:30, the only house with lights still on is mine. It’s 3/4 of a mile from downtown, but doesn’t feel like it.
- I’m really happy with my place, but if I had it to do over again, I’d build something even smaller.
- There are far, far too many choices of paint colors, cabinet pulls and faucets. And, if you want to really go after the 1% who are making money hand over fist and taking advantage of folks who are just trying to achieve the dream of home ownership, it’s the company that makes towel racks. They are literally a piece of metal with some screws. There’s no R&D overhead, there are no famous artisans on staff that demand a high salary – these guys are making a killing selling shiny metal sticks. What a rip off. Next time – towel hooks only.
I was really fascinated (and sometimes frustrated) by the whole process. If any of you are considering building, I’d be happy to discuss it with you and answer any questions. My consulting charge is one beer or one home cooked meal.