If you’re in the market to buy a piece of New York City real estate at a bargain price, you’ll quickly discover that options are relatively limited. You could, however, search for a fixer-upper and find a few more reasonably priced listings that probably use the familiar phrase “needs TLC.” But choosing to buy a property that needs renovation work isn’t necessarily a smart idea just because you can get it for a lower price. Here’s why.
Some apartments and townhouses, mainly pre-war properties in need of significant overhauls, could end up costing you more in time and money than if you continued to search for and ultimately purchase a pricier home that meets your needs. Bear in mind –– even those apartments and brownstones with “good bones” can end up running a high tab of remodeling costs, especially if you’re a novice when it comes to estimating renovation prices.
You’ll need to know what red flags to look for, and when a listing is a good deal vs. a money pit. Keep these few points in mind when shopping for that New York fixer-upper, and if you don’t come with experience, consult with a construction pro before making an offer.
Look for opportunities to make cosmetic fixes such as remodeling kitchens and baths.
A brand new kitchen in New York City is expensive (you should probably plan for at least $40,000-$50,000 for a simple, small kitchen, and $100,000 and more for a larger, more elaborate kitchen), but in most instances, renovating a kitchen is pretty straightforward. The same goes for most bathroom remodels. However, for an apartment, you’ll need to review your building’s alteration agreement for details on construction standards.
Tip: Keep the existing layout, and you’re less likely to run into complications.
Walk away if you run into an old electrical panel.
Installing a new service from the basement to an apartment won’t be an easy, inexpensive fix. Plus, if the electrical hasn’t been updated or you require more amps than what’s available, you’ll be limited as to how many wiring changes, if any, you’ll be able to make within an apartment. Something as simple as adding a few outlets might not be possible.
Tip: Hire an electrical contractor to evaluate the service before you fall in love with any handyman special.
Be sure the overall layout works for your lifestyle.
When you get into gutting or removing existing walls, you have no way of knowing what you’ll find during demolition. Plus, more than likely, you’ll be limited as to what walls you can remove since some will be load bearing in townhouses (avoid opening up that can of worms, if possible), and every NYC apartment contains chases and mechanicals. Always ask the building’s super for the location of risers.
Tip: Imagine how you’d live in the existing space once it’s been prettified.
Look at the big financial picture as well as reselling.
Whether you’re considering a renovation of an apartment or a house, think about total cost including renovation ––, not just the purchase price. Compare the listing to similar properties in the neighborhood in which you’re buying.
Pull real costs together and not merely approximate numbers. Add your purchase price along with average renovation prices, as well as architectural fees. Then, compare this sum to prices of other apartments with the same square footage in buildings with comparable amenities.
Tip: Ask yourself these questions:
If I had to sell the unit shortly after the renovation is finished, would I be able to get within ten percent of my asking price? And, would the asking price need to be higher than market value?
Budgeting for When Buying a Fixer-Upper
This is one of the most expensive areas to upgrade. The average kitchen remodel costs about $26,000. You can spend much more, of course. There is a good reason for the high price tag and desire to spruce it up since you spend a lot of time in the kitchen. Not only do you cook there, but it is also the place party guests tend to congregate (it is typically near the food).
You want your kitchen to look appealing while also keeping in mind that it should be functional.
The biggest chunk typically goes toward cabinetry and hardware (29%), according to the National Kitchen & Bath Association (NKBA). Custom cabinets cost a lot of money, so buying off the rack may be an area you can achieve some savings. Installation is another major expense, so you could do the work yourself if you are handy and willing to put in the time. Other major cost areas include appliances/ventilation and countertops.
A smaller remodel in the $10,000 range might including updating your kitchen to be environmentally friendly (which can save you money on your utility bills), such as LED lighting and new windows, along with upgrading smaller appliances, such as your dishwasher, refrigerator, and oven. Moving up to the $15,000 remodel, typical projects could include updating your replacing your countertops and backsplash (staying away from more expensive materials (such as granite). Instead of replacing your cabinets, you could also reface or refinish them. For the less expensive and more moderate remodels, don’t underestimate how a paint job, which is relatively inexpensive compared to high ticket items, can improve the look of your kitchen.
Moving to the higher end remodels, you can expect to spend upwards of $15,000, and it can easily climb higher. This involves changing your countertops with high-quality materials (e.g., granite), installing custom cabinets, putting in high-end kitchen appliances, and replacing the flooring (hardwood is beautiful but expensive).
This is an area that can cost very little, or if you are looking to make extensive changes with high-end fixtures, a whole lot. It is not unheard of to spend $50,000 for a complete gut job and high-end remodel. Several years ago, the NKBA, cited the average at about $16,500, with upscale remodels coming in at more than $52,000. Labor tends to eat up a lot of the cost, with materials encompassing the balance. For a fairly small space, there are a lot of choices to make regarding products.
This comes down to plumbing and design. If you are considering moving the bathtub to turn it into a master suite, this will be very expensive. Then, consider the cost of the flooring and shower tile. Regarding budgeting, a rule of thumb is to set the amount at 5% to 10% of your apartment’s value.
There are many floor choices and a wide range of prices. Quotes for the materials are based on the square footage of the space. Factor in labor, of course. When choosing the type of flooring, consider your lifestyle, and balancing practicality with design.
Hardwood floors are popular and very nice. There are different types of hardwood floors, which vary in quality and price. Oak, maple, and cherry are at the high end. There are also choices regarding solid or engineered flooring. If you are considering hardwood flooring, keep in mind the house rules which may require you to carpet a certain percentage to minimize noise.
Other choices, which may be less expensive, include laminate, vinyl sheet, vinyl tile, and luxury vinyl.
There are plenty of places to get quotes from, including Costco, Home Depot, Lowe’s, and specialty flooring places.
When formulating your budget, keep in mind how long you plan to spend living in your new home. If you plan to sell quickly, you will not enjoy the fruits of your labor.
You should also not forget to budget for unexpected problems. Hopefully, nothing significant is uncovered, but you need to be prepared. A general rule of thumb is to set aside 5% to 10% of your total budget to cover extra costs that come up. Of course, you could choose to be more conservative by having a larger contingency budget. That way, you do not have to choose between giving up certain things and spending more than you planned.
- 1 Look for opportunities to make cosmetic fixes such as remodeling kitchens and baths.
- 2 Walk away if you run into an old electrical panel.
- 3 Be sure the overall layout works for your lifestyle.
- 4 Look at the big financial picture as well as reselling.
- 5 Tip: Ask yourself these questions:
- 6 Budgeting for When Buying a Fixer-Upper
- 7 The Kitchen
- 8 Bathroom
- 9 Flooring
- 10 Concluding thoughts