Photo credit: Peter Hartofilis
Here’s the quick answer: apartment renovation is an option for everyone, yet it requires a great deal of planning.
For owners with a low mortgage rate, renovations could be more cost effective than selling and buying a new home.
If you are like many buyers and are trying to lock in a lower purchase price to offset your high monthly mortgage payment, you may want to consider purchasing a home that needs renovating.
Here is how to approach the issue to determine if renovating is the right opportunity for you.
I am happy to share my lessons with you. About a decade ago I renovated a brownstones in Harlem, and I learned what to do and not to do through this process.
First: All renovations in NYC require plenty of planning. Perhaps an entire brownstone remodel is overwhelming to you. Can you remodel a condo? Yes, if you enjoy the process of home improvement or have a passion for design.
One client of ours loves the process so much that it has become a second source of income. She and her husband have perfected their business model. They purchase apartments that need renovations and slowly renovate while they are living there. When it is time to sell, they move out and let the home shine while they get to work on their next project. She has a terrific eye for detail and an innate sense of how to maximize space ensuring her projects are successful.
In some cases, purchasing a property that needs renovation may be more affordable than buying a fully renovated one. However, you need to factor in the renovation costs. Starting with a clear budget is critical. Anyone who has done a renovation will tell you despite your best efforts, you will run over so make sure you have a reserve.
Top NYC real estate agents have plenty of stories to share about renovations that run over budget in Manhattan real estate and there are two key reasons:
- The uninitiated never anticipate how long it will take for the building to approve their plans.
- Once work begins, especially if it involves plumbing or electricity, even the best NYC contractors may find challenges when they open the walls which they never could have anticipated before the work began.
When creating your budget, factor in how long it will take for the renovation and include those additional property carrying costs in your budget if you cannot occupy the home until the work is done.
To mitigate the total upfront costs, one buyer who recently purchased a Harlem condo — and travels outside the city every summer to stay with family in France — intends to use the annual time away for renovating. His plan is to do a small amount of work every summer until the fully renovated condo is completed. This is certainly a smart way to approach renovating your home.
Your long-term plans for owning certainly have an impact on the decision to renovate. If you are not planning on going away every summer and you might not live in your apartment for long before renting it out, you may choose to do smaller renovations. There are plenty of apartment renovation ideas online — Apartment Therapy is a great resource for showing big impact with small changes.
Be aware of any building regulations or co-op and condo board rules that may impact your renovation plans. Some buildings have restrictions on the types of renovations that can be done or specific contractors that must be used. Additionally, there may be a wait list.
There are buildings where the number of renovations which can be undertaken at any one time is limited. If your renovation ideas simply involve painting, updating appliances and light fixtures to freshen up the home you will not need building approval.
If you are undertaking a larger renovation keep an eye on what improves your resale value. There are plenty of Upper West Side apartments for sale or Upper East Side real estate opportunities in New York. Both neighborhoods have seen many gorgeous new developments in the past few years, making the pre-existing condo and co-op apartments, which need renovation, seem sad and stale.
Kitchens and baths
Kitchens and baths always add the most value when they are renovated. And because they are important rooms in any home, these renovations frequently require both building approval and city permits.
“There is never a good time to renovate, so the key is to handle it prior to moving in,” said Peter Hartofilis, owner of Essential Home Remodeling Inc.
Peter said that if you wait until after moving in, it becomes harder to organize the renovation as you would need to account for living arrangements.
“You can always live without a kitchen by ordering food from different restaurants, but a bathroom is essential due to the fact that a toilet and shower is needed,” he said. “I would say that the kitchen, bathroom and flooring are a necessity to handle prior to moving in.”
Peter cites these reasons:
- “It’s more cost efficient as prices tend to rise the longer you wait. Insurance premiums keep increasing and unfortunately the end user pays for it in their pricing.”
- “An empty space is needed to renovate the floor so once furniture is in, it creates another layer of difficulty. Even if the floor has been stained or has one more stain left, once the floor gets worn in a few years, a new one will be needed.”
Energy efficiency is also on everyone’s minds in NYC. Local Law 97 sets carbon caps for buildings over 25,000 square feet, driving the city toward net zero emissions by 2050. Keep this in mind as you make choices around renovating your place. You don’t have to go crazy and install an electric stove if you purchase in a building which still runs on gas. But exploring even small energy efficient choices can make an impact. For example many homeowners have installed a Nest Learning Thermostat to improve the efficiency of their heating and cooling systems.
Improving the functional needs of a property is also a key component of increasing the value over the long term. Having a washer and a dryer in an apartment has become more important over the past few years. Many buyers are not as willing to use a central laundry, which is typically located in the basement of a building as they were even prior to 2020. Not every building will allow their installation as the stress on the plumbing can overwhelm the system. Still there are plenty of buildings which do allow it and you may find an apartment to purchase which enables you to install one.
Realize before you purchase that such additions like laundry do require building permission because they want to be certain your plans do not have a negative impact on the structural integrity of the building.
Adding closets is another great way to increase functionality as many pre-war homes do not have the same closet capacity we require today. Older floor plans, while offering large, gracious room sizes, may also be inefficient for today’s living standards. Find some dead space and create storage to add value to the home.
If you have the time and resources, renovating a property can be an investment opportunity. Simply create your strategy bearing in mind your financial resources, the time you need to allocate, and which changes will actually impact your rate of return.
In NYC real estate, you make money when you buy wisely and collect it when you sell.
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