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January 6, 2009
renovation, and insanity
My wife and I are thinking about buying a small two family house in carroll gardens that will need almost an absolute gut renovation. Apparently the water was left on in the unattended house and it sat for many years without repair. There looks to be tons of water damage to everything on the interior (walls, floors, electrical is shot, plumbling is shot, boiler is shot).
I have not had a contractor come in and price out a renovation yet. I've also been looking at mortgage rates and construction loans (in the research phase) but this seems a little unclear and/or difficult in the current mortgage market.
What I'm wondering is whether this is the type of project to walk away from in this market or whether this is something to pursue.
A little about the situation:
1. Property is being sold as is and in under 800K in carroll gardens. There is some buildable rights and the building is zoned two family. Building is about 1500 square feet on three floors (about 500 sq /ft a floor)
2. We are stable employed with good financials and no debt.
3. We have never bought or renovated before.
So the real question is how many people here would run for the hills with this one? Is it better to just suck it up and buy a condo or coop?
I do love brownstones too but we're basically buying a shell and rebuilding everything (almost) on the interior.
Comments
We bought a fixer upper, but nothing as bad as the one you are contemplating. This is serious work and stress. Especially, if you have not done it before. We are toward the end of gut renovating the entire ground floor. And it is nasty, stressful and crazy. Even with a lot of preparation. If I had to do it over(I did love the house though and still do, that's why we are here and doing it) I still would, but it is not to be wished upon your worst enemies. Do the math, get an engineer over, several contractors. Where will you live? Pay rent and mortgage? And how will you work in the middle of all this. To each his own, but this is not something to be taken lightly. When we bought, the engineer said, 'Oh this is just... This will just cost...'. NOT!
And isn't this a market where you can get deals? Have you looked around a lot?
My 2 c.
Posted by: ohiise at January 6, 2009 8:14 AM
Assuming you will not be living in the mess as it is being renovated, the questions remain largely financial. Can the house be mortgaged as-is? Can you afford the two mortgages at the same time? What's the projected cost of renovating and do you have enough cash to cover that at least 1.5X plus a year's cushion in case something happens to your income?
With the right contractor, a well thought out budget and a real eye to see the end results of a beatiful house, a renovation can actually be an enjoyable experience.
Posted by: daveinbedstuy at January 6, 2009 8:43 AM
I bought a dump 7 years ago and built a new house behind the front facade. It was not easy and it was expensive, but I am an architect and it is what i like to do and my wife and I have been very happy with the result. That said, give me a call if you like and tell me a bit more about the size of the building etc, and I'll tell you whatever I can.
BRC
Posted by: Brendan Coburn at January 6, 2009 9:18 AM
There are the economic questions and then there is the gut check.
Economic questions:
1. Can you carry two homes for double (yes, double, because that's how long it will really take) the length of time your contractor tells you it will take to make your new home inhabitable?
2. Does the price plus the renovation cost (contractor's estimate) put the house in line with renovated comps in the area? You need to be able to answer that yes for a construction loan because you will be financing based on anticipated value fo the completed home.
3. Do you have the means to go 50% over cost? You are gutting from the outset, so that should minimize change orders, but you never know, you really never know.
Gut check
How do you do on roller coasters? Do you have the time to be involved with the work on a daily basis and keep an eye on things? Do you negotiate well, because everything will be a negotiation? If you cave in too easily or if you blow your stack at the drop of the hat, you are not going to make it work with your contractor. Are you ready to pick everything, and I mean everything, for your house? Every fixture, cabinets, tiles, countertops, sinks, doorknobs, doors, moldings, windows, etc.? Can you live with uncertainty for long periods of time? Do you and your wife communicate well about money? Do you trust each other's decisions?
We went through the whole shebang and then some, and lots of people on this site have done it, but it isn't easy. If you can stomach it, and if the financials are right, it can be worth it in terms of getting a great house exactly as you want it in a grweat location. However, I am not sure anyone would willingly do it if they knew in advance everything that it entails.
As for a construction loan, if the appraisal will support it, there are banks that will do it and will fold it into the mortgage, releasing construction proceeds as items are completed. The research on this is hard so use a mortgage broker.
Posted by: slopefarm at January 6, 2009 9:49 AM
I can't offer any advise on a shell, but one other factor comes to mind. A three story, 1,500 sq.ft., two family is very small--will it be enough for your needs?
Posted by: Bob Marvin at January 6, 2009 9:54 AM
You would be doing someone a very big favor if you took this problem off their hands. Is the seller asking a fair price or is he thinking that he is selling you a Castle in Paris?
Posted by: hannible at January 6, 2009 10:54 AM
This is just my personal opinion but I don't think a gut renovation is a good idea for a first project. Its not easy for anyone to go through but if you have no knowledge of renovation/design/home maintenance, I would suggest finding a place that is more of a liveable fixer upper so you can learn on a more reasonable pace.
During our gut reno, the knowledge I had gained from prior smaller projects was invaluable.
Posted by: Mrs. Limestone at January 6, 2009 11:18 AM
If you have never owned a house and have never dealt with a significant renovation; if you are not a construction worker yourself; this is not a project for you.
You can do that, if you have the money for an architecht to design the renovation for you and watch over what the contractors will actually do.
Dealing with contractors is a full-time job.
Posted by: Gosha at January 6, 2009 11:29 AM
Would this place happen to be on 2nd place?
Posted by: rjm at January 6, 2009 11:30 AM
A gut reno is one thing, but with all that water I'd be worried about foundation and support beam damage. That could take it into an even higher plane. Double the estimates you get. But you're most likely looking at an easy half a mil.
I second what many have said above; and I would say the most important thing is to have time on your hands. If you don't have time to see the work at least once a day and spend time meeting with the GC every day, forget it. But if you have some time on your hands and are bored with your job, hey, it's just another challenge.
Don't overpay for the property either.
Posted by: denton at January 6, 2009 12:17 PM
there is nothing like owning a restored brownstone in brooklyn - especially one that has been gutted and restored structurally and astetically. i wouldnt trade mine for the world. of course, it is a massive project, expensive, and a headache at times, but that makes it all the better when you and every family member and friend get to enjoy it for years and years to come without having to worry (because everything was taken care of properly the first time !). and you are living in something that embodies your taste and your lifestyle. 3 different floors in new york city? you cant beat it. its your home, its where you live, and you should love it every time you walk in the door. one year of construction for 20 years of enjoyment. go for it. and well, if you havent guessed by now, im a carpenter-contractor who does this for a living....
Posted by: chinaspice at January 6, 2009 2:28 PM
you never owned our purchased a house before in NYC, and are planning to purchase a shell. my suggestions would be to start looking for a condo, or something that wouldnt require so much work.
Posted by: Gowanus_Bklyn at January 6, 2009 2:44 PM
rjm, it's not on second place but farther down (on huntington btw). As to everyone else, I pretty much thought this would be the case in terms of opinion. Perhaps it's a pie in the sky idea.
I definitely have the time on my hands to tackle something but my gut feeling is that this is a huge project to undertake and too much of a headache for me.
The other issue that some of you have raised is that I don't want to overpay and get stuck with a huge mess that then balloons. The way I calculated the costs and purchase is such that we could afford to run double for a while but who wants to do that? And is it common for these things to double in time or cost?
RE: a condo. That's probably the best option but I've fallen into the "I think prices are still too high" camp and I guess now me and my downpayment might have to wait it out.
Thanks for the advice all.
Posted by: xander at January 6, 2009 3:12 PM
xander, I was thinking about this some more, and it doesn't make sense at that price. If you pay 800k for the shell, and 500k to re-do it, you're up to 1.3 million for only 1500sft. That's a lot per sft. For 1.3 mil, you can buy, in this market, a helluva condo or coop, and move in tom'w.
Of course, I should talk, I did the same thing at the same price, but my renovations were not structural, only a gut, and I have 2000 sft plus 1000 usable sft in the basement.
My feeling is not necessarily that you should walk away, but that the building is over-priced. By all means get some professionals to look at it, but I'd definitely include a structural engineer.
Posted by: denton at January 6, 2009 7:01 PM
if you are talking about the place on huntington between court and smith, i think that it a great buy..i live a couple blocks away (and am a contractor as well) and think that the 500k figure for a gut reno, unless you want to build out to maximum floor area ratio, like the corcoran condo down the block is overstated...drop me a line and i can show you a couple of houses in the neighborhood, so you get a feel for what you end up with...errol832000@yahoo.com
Posted by: eman1234 at January 6, 2009 9:30 PM
Well Xander
the fact that you are considering this leads me to believe that you are not planning to run for the hills.
Sucking it up and buying a condo or coop comes with multiple headaches dealing with coop/condo boards and managements companies and all the personalities that come with that reality. etc...
(it gets worst when you want to renovate)
A brownstone shell purchase and rebuild may be a plus if you plan on staying in the neighborhood long term.
The key is working with an experiences team; an architect and a contractor with a set schedule for the project. I am sure you recognize it is a good size project and it will come with a few headaches but if planned well the goals of the project can be achieved.
Issues about overpaying or running double are legitimate concerns and will be a call you will have to make with respect to the whole project and the long term value.
Creating a triple level haven with a private backyard in the city is a great idea and even better tailored to meet your family's needs.
Feel free to give us a call with any questions you may have.
It will be a pleasure to help you.
George Architect - (917) 414 1511
Posted by: silverstar at January 6, 2009 11:56 PM
Just FYI, my sister gutted and rebuilt a two-story 1920s cottage/1980s re-do. It was scheduled to take one year, it took two. I am guessing they spent a million, but I didn't ask. (She's an interior designer and one of her professors was the architect.)
She and her husband lived, alternately, with my dad, then my mom, then a friend.
When you are done, the place will likely look modern, btw, not like a brownstone.
Also, please be aware you can buy a stunning brownstone in the most swanky part of Bed Stuy, Stuyvesant Heights, for $800,000. It's on the A train and is in every way a desirable neighborhood. (As DIBS will tell you.)
Posted by: mopar at January 7, 2009 12:55 PM
xanded, just to put in my 2 cents again - i agree with george the architect. finding the right team to help leads to a positive experience. the other thing worth mentioning is the project doesnt necessarily need to cost 500,000. . .and before jumping to the conclusion that the structural damage is beyond repair, you should have an engineer or builder look at it - that way you'll know what youre getting into. ill say it again, there is nothing like owning your own home and being able to do whatever you want to it - no questions asked ! im shane 917 495 7120 if you have any questions. good luck !
Posted by: chinaspice at January 7, 2009 1:05 PM
hey all, thanks for the comment.
I'm going to wait and see if the price drops a bit on this one. I can't do 500K in renovation on an 800K house or even 200K renovation on a 800K house so this might be a moot point.
In 6 months we'll see. For the contractors who helped with your opinions I'll try and follow up.
Posted by: xander at January 7, 2009 2:58 PM
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