The biggest update of the last 2 years is what I have been spending a majority of the last 12-15 months doing. As alluded to in earlier update posts, my mindset switched when I got to the next band-aid renovation in 203#1. I was tired of beating my head against a wall doing the same thing over again and continuing to push off the more major changes that were needed to take the building to the next level. Sweat equity was only taking me so far and I was burned out.
So obviously I went to the other extreme. I decided to "go big or go home" and bite the bullet by planning a huge overhaul renovation that would require both a gigantic loan from a bank and a professional general contractor to spent all that money.
And so I did it. I did what I do best - make spreadsheets and put together a sales package to shop to banks. I built a market survey of every market-rate rental in the area to comp against (take that appraisers I thought), built a pro forma that was so complicated that most bankers were afraid to ask a question (take that mortgage underwriters I though), and designed maps and executive summaries to sell the story of the area (believe that loan committee). Along the way I delved into new areas for me like spending money on architects - over-analyzing each and every design detail (and learning how hard it is to both Tetris a bathroom into an existing building and meet code requirements for windows in bedrooms), spending money on entitlement approvals and permits (and bending to their will in the Historic Conservation Board), spending money on LEED certification (and just getting validation that the things I was already going to do check their boxes), spending money on Commercial CRA tax abatement applications (and navigating red tape that won't even let me start demo until I've kissed the ring), and spending time with general contractors (and continuously not understanding in any real detailed way where all that money is going to go!).
Now to be fair, when I started, I was green - like walk into a room and not have any clue green. I'm still a novice, but I think I'm getting to the point where I know enough to be dangerous. It's really been an expensive learning experience (bye $30k), but there is still a ton to learn before I'll ever finish a project; let alone a really good one.
But the bottom line is that I spent a bunch of time & money learning, and got there. On 2/9/2018 I had done it. I had two loan commitment letters in hand from two community banks that were at terms even better than I'd pro forma'd out at the start. I had a contract ready to sign with my general contractor. I had the final bill that my construction permits were ready to be picked up and ready to get started. My CRA tax abatement was ready to send to city council for approval and final blessing by the mayor.
And then I freaked the fuck out and decided to put it all on hold.
That day when I reached the no-turning-back moment, I had to take a hard look in the mirror and ask myself if I was doing the right thing to commit to moving forward. The problem was that my gut was telling me otherwise. Yes, I convinced others that I could do it, and there was a very real chance that I could do it as it was laid out on that paper.
But it just so happened that that same week the stock market dipped hard for the first time in a long while, so I contemplated the downside risk. How confident was I if things didn't go as planned? Was I willing to risk everything I had (because it was all in there - and even more that my family had contributed)? Would I be able to achieve the rents that I had comped and projected if markets did turn south? Then I contemplated the yoga that I had already done to make the ever increasing construction costs work (it went up over $50k in 3 months); how would I handle it if that continued? Then I contemplated where else I could find money if the bank's appraisal didn't come in high enough; how would I fill that gap?
In the end the question that made me hold off was: why am I putting so much pressure on myself to do this now & forcing this project?
Nothing was forcing me to take this potentially fatal leap except my own expectations and the sunk costs. So I wrote down the flipside. What did my life look like if I didn't do this project now? And frankly it looked a lot less risky and like there were a lot more opportunities that I could take advantage of if I didn't do this project now. So here I am today, ready to do this project, but putting it on hold and instead looking for my plan B to get me to the point that restarting this project makes sense.
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