Saturday, October 21, 2017

Building Update #3

Funds Raised - $825,000   Days Remaining - 11


I've got several bits of news, but I'll lead with the most important one.

Fund Raising
As you can see, the fund raising continues, albeit at a slower pace than at the start.  The slow down makes sense, actually.  At first, the loans were coming from people who were ready to go and, in some cases, they were people I had talked with in advance.  Now, it's people who need more time to think about it and make arrangements.  But, I'm not discouraged at all.  $825,000 are only the loans that I'm sure of -- either the lender has committed to making the loan or the funds are already in the bank.  There are another $400,000 in loans in which I'm still working out the final details for, but that I feel pretty confident about.  Finally, there are some other lenders that I still need to reach out to personally.  Bottom line, we're going to be close, but I'm not sure we're going to make by relying on only larger loans.

Considering that, I think it's time to open things up for smaller amounts.  My initial reason for looking for larger loans was the desire to keep the number of people involved to a minimum so that my bookkeeping work would be more manageable.  Not that it would be that big a job with 300 lenders but, I may have a few other things to work on in the coming months.

If you are in a position to offer a loan between $10,000 and $75,000, I'd love to talk with you about the details.  The general terms of the loan are 3% interest paid annually and the loan to be paid back in nine years (but I could potentially pay it off earlier).  The loans are secured by the building so they are pretty safe (barring a huge earthquake).  There is room for changes if you would like them (e.g. interest rate can be as low as 2% or as high as 4%, interest can be paid quarterly, and the term can be shorter or longer) and the amount can be anything from $10,000 and up.

In terms of transferring the funds to me, there are a couple of different deadlines, depending on how the money is coming.  Remember, if I don't have confirmed funds in the bank by October 31st, I'm going to have to cancel the deal.  Since that is only 11 days away, the latest that a personal check is sure to work will be noon on Monday, the 23rd (unless the check is from Bank of America; I'll explain that in a second).  Any later and the funds might not be confirmed by our bank in time for the 31st.  Checks from Bank of America are an exception since that's where the company accounts are located and the confirmation is instant.  As a result, BofA checks could be as late as Friday, the 27th. Electronic fund transfers should be sent by Thursday, the 26th, to be safe.  Cashier's checks and wire transfers can be delivered to me (in the case of cashier's checks) or sent (in the case of wire transfers) by Friday, the 27th.  All those dates are erring on the safe side but that's how I'd prefer to err.

As you can see, we need to move pretty quickly if this is going to work out.  I am available to meet with you anytime and anyplace in San Francisco to discuss details or to pick up checks.  I'm also available anytime by phone at 415 385-5968 to answer questions or merely discuss the loan.  If there is any information that will assist your decision, please don't hesitate to ask.  I'll also be around the shop all day tomorrow (Saturday) if you want to drop by and chat.

One last thing -- if the deal doesn't work out for any reason, I'll be returning the loan amounts with interest to date, within a week of October 31st, two weeks at the outside.

Business Structure
Our lawyer worked really quickly and had all the paperwork for the company completed and delivered to me by 10 am yesterday morning.  The same day, I went by the bank and had the accounts set up.  So, D.D. Harriman LLC is a real thing.  If you're curious, you can check out the documents in the private section of the web site -  If you need the password, just drop me a line at and I'll get it to you.

That company will own the building and is the borrower for the loans.  As I explained in a previous update - - that structure both keeps the finances clean and simple while also protecting the interests of our lenders since the value of the building is not entangled with anything else.

I've gotten a few more pictures of the building and retail space.  I've put the up at the sponsors' blog, if you'd like to check them out -

When Do We Move?
Several people have asked me, assuming we get the building, when we're going to move.  There are two answers to that question -- really soon and not for a couple of years. The rent on the retail space in the building in the current market is more than we pay at our current location.  Since we have three years to go on our lease, I would love to rent out the space on Haight Street for a couple of years.  It would improve our cash flow.  It would also give me time to do repairs and make a really thorough moving plan.  It's also possible that a tenant would chose to make some of the repairs that we would need to do otherwise (like painting).  At the very least, a tenant would clean up the bathroom (Oh.  My.  Gods.  It's disgusting.  Think west Texas rest stop crossed with an Irish pub on Friday night.)

I'm also thinking it might be a great chance for a new business to test out the waters without a big financial risk.  I could offer them a short, one-year lease with an option to extend for one year.  If their idea works, they can move to a more permanent location and, if it doesn't work out, they won't be stuck with a big financial obligation.  I remember when I first opened how much I worried that, if the business didn't work, I would be in serious financial trouble because I was obligated to pay rent for the whole three years of the lease.  A short term rental could be good for both us and the tenant.  And, since there is no rent control (or, really, any tenants rights to speak of) on commercial property, when the lease is up, they'll have to move.

But, we can't afford to have the Haight Street space vacant while we still pay rent on Valencia St.  Which is what brings us to the "really soon" option.  If I can't find a tenant quickly, we'll need to get moved ASAP.  In that case, I'm in for a hell of a couple of months doing the construction work and we'll be aiming to move in January.  I'd do it sooner but there's no sense in moving during the holidays.

And that's all the news for now.  Inspections are on Monday and you'll probably hear how they worked out from me that evening.  Have a good weekend and, if you're free this Sunday, October 22nd, remember we're picnicking in Golden Gate Park, from 2:00 pm - 6:00 pm.  We've reserved Table #1 at Lindley Meadow.  Directions are at the link below, but the short version is that Lindley Meadow is on the south side of JFK Drive, across from the 30th Avenue and Fulton Street entrance in Golden Gate Park.  (At 30th Avenue and JFK, there is a sign for Lindley Meadow.)

You can even skip RSVPing for the picnic and just show up if the mood takes you.  We'll have some basics, but we enthusiastically welcome food contributions for the picnic.  We'll look forward to seeing you there.

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