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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 fairly 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 townhomes, particularly pre-war properties in need of major 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 isn’t inexpensive (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Walk away if you run into an outdated electrical panel.
Installing 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?