Discussion: Market Value of a 2-Family vs 3-Family
After revealing on the Renovation blog that we are converting our SRO into a 2-family residence, we were contacted off-list by a regular reader who’s also a veteran owner and renovator of Brooklyn brownstones. He advised us strongly to convert to a 3-family instead, citing a higher market value ($50K to $75K higher), greater flexibility…
After revealing on the Renovation blog that we are converting our SRO into a 2-family residence, we were contacted off-list by a regular reader who’s also a veteran owner and renovator of Brooklyn brownstones. He advised us strongly to convert to a 3-family instead, citing a higher market value ($50K to $75K higher), greater flexibility down the road, and the prohibitively high cost of trying to change the C of O again at a later date. When we were originally discussing the matter with our code consultant, we were persuaded that the additional costs and code requirements of a 3-family (sprinklers or fire escapes, handicap access) made it less desireable. What do you think? Have any of you faced a similar choice? Does a 3-family really command such a price premium?
Hi,
I am considering converting my legal 4 family brownstone in the Park Slope area of Brooklyn into a 2 or 3 family brownstone for the purposes of selling it down the road and hopefully beniffitng from a higher sale price and paying lower taxes. Can someone suggest process that I need to follow or a good expeditor that can assist me with this process? I would also welcome any wisdom that you can impart in terms of recommendations and/ or the advantages/disadvantages with this idea, other than the loss of any rental income.
I currently rent the Garden Apt. and one other floor. I live on the other 2 floors with a bathroom on each and only 1 kitchen. I plan on selling the brownstone within the next couple of years. Any sense of process, cost and time would be greatly appreciated.
The evidence actually points to the contrary. 2 families still have the record price in all brownstone neighborhoods – just ask your local appraiser. Although appraising 101 says you rate a 1 family higher, their lower frequency of market availability does not show this in reality. 3 families work better for a landlord – not for resale. The top dollar customers come to Brooklyn for more space and already have money – they are hesitant to have one tenant, nevermind 2.
“In the begining I thought that I would want the kitchen on the parlor floor, but now that I’ve had the kitchen right off the garden for so long… I can’t bring myself to do it. ”
I agree – if I had a 3-story one-family, I might put the kitchen on the garden level in back and keep a formal dining room (or maybe a family room) in front. But, I have a 4-story and there is no way I’m running up and down that many flights to get can of beer. So, if I were using my bldg as a 1-fam, I’d keep the kitchen on the parlor floor. Overall, I find that having the kitchen where the family does most of its hanging out it best. My bldg is wide enough that I can fit both the kitchen and a sizable dining table in the rear parlor. If it were a narrow bldg, I’d probably put the kitchen in an extension – you see this configuration a lot in the Park Slope townhouses along the park on 4th and 5th streets. Of course, the extension really cuts into the garden space.
“We are currently purchasing a 3-story brownstone that is configured with a rental on the top floor and the main kitchen on the ground floor. Before we move in, we are considering reconfiguring it either to (1) a single family, (2) to an upper duplex with a kitchen on the parlor floor, or (3) leaving it as is with the rental above and the duplex below to facilitate easy access to the garden for us (but still moving the kitchen to the parlor floor).”
I have the same situation. After living in my house for 9 years as a one family, we are finally going to do the big reno. In the begining I thought that I would want the kitchen on the parlor floor, but now that I’ve had the kitchen right off the garden for so long… I can’t bring myself to do it. BTW, we use the top floor kitchen as a laundry room.
So when we finalize plans with our architect, the layout will be with the kitchen on the garden floor. We will move the laundry to the parlor floor (thereby providing plumbing on that floor for a kitchen should a future owner want it there)and continue to use the house as a one family.
If I were to use the house as a two family there would be no question. Garden floor rental with owner’s duplex above with deck off the Parlor floor. You can’t beat that configuration for resale.
Can anyone tell me if you’d have to change the C of O if it is currently a 4 family and it was changed to a 3 family? Right now the house is 4 story – 4 family. I would like to convert 2 units into a duplex keeping 2 rentals
“…currently purchasing a 3-story brownstone …considering reconfiguring it either to …an upper duplex with a kitchen on the parlor floor…Can anyone comment on either the costs involved in any of these options and/or the impact on perceived value of the property.”
Sure thing. You really need to consider where your family would like to do most of it’s hanging out. The parlor floor usually provides a better living space due to higher ceilings, better light, etc. We installed a kitchen in our rear parlor where none existed – so the plumbing costs are major. In addition, there’s often not much free wall space to hang cabinets, so islands and pantries are frequetly used. I would budget up to $50,000 for the kitchen. If your kitchen is on the parlor floor, then you’d also want a door (to a deck) to the backyard. Decks can run $5,000 to $10,000. Converting a window to a door could be $2,000. If I were you, I’ move the tenant to the garden level – which doesn’t mean you have to give them garden access, though it helps market the rental. We used to provide the tenant with space under our deck, ut then noticed that it was rarely used. With our next tenant, we did not include any outdoor space, but were still able to get same rent – we’re only a stone’s throw from Prospect Park so I don’t think it’s a big deal to them.
One other thought, if you can afford it – an extension off the garden floor would provide a bigger and better rental, and you could put your deck over the extension. Just a thought. I’d budget up to $20,000 for an extension – just a guess, as I did not do that.
As far as the cost of renovating your garden level to accomodate a rental, I’d budget around $20,000 for a low-end kitchen, low-end bath, carpentry, etc.
Much depends on what else you need to do to the house – does it need all new electric service, plumbing, roofing, etc. I spent over $400,000 on renovation due to the reconfiguration I described, and the fact the house needed total systems upgrades, plus change of C-O to 2-fam.
We are currently purchasing a 3-story brownstone that is configured with a rental on the top floor and the main kitchen on the ground floor. Before we move in, we are considering reconfiguring it either to (1) a single family, (2) to an upper duplex with a kitchen on the parlor floor, or (3) leaving it as is with the rental above and the duplex below to facilitate easy access to the garden for us (but still moving the kitchen to the parlor floor).
Can anyone comment on either the costs involved in any of these options and/or the impact on perceived value of the property.
In your rennovation blog, could you post some of the steps you’re taking to convert your C of O? I have a 4 story brownstone w/ a C of O for 2 that I’ll be converting to 3. I understand it’s a laborious process, and would love to hear how you’re getting on.
I’d have to agree with the majority of the comments, which are saying that 2-family is the way to go. If you’ll notice, income properties go for significantly lower price mulitples than 1 or 2 family properties. I believe this is because high-end brownstone buyers are paying up to get the space and quality of a single or 2-fam home. A 3-fam simply does not offer the space and layout that high-end buyers desire.
I converted my 4-story home from a single to a 2-fam with a garden-level rental. I choose this layout because it provides me with the feel of a large home and because it provides the greatest separation between me and my tenants. I really don’t see how owners with tenants overhead do it. I’ve vowed never to live underneath anyone ever again – it drives me crazy to hear squeeky floors and elephants overhead. Also, my owner triplex provides 2 baths and 5 BR’s. I simply do not need more space. But as a 3-fam, I would only have a duplex, which would have only been marginally more space than the 3BR co-op I sold. Why would I sell a co-op, pay wayyyy up to get a brownstone, which involves ten times the money and hassle, to barely increase my quality of housing?
As far as I can tell, its the single and 2-fam homes that are commanding top prices, not the 3-fam and above – and for very good reasons.
The last point is that in my 2-fam configuration, it would be extremely easy to convert back to a single family – we dream of someday not needing a tenant – and that apt will become my game room complete with pool table, dart board, home theatre, and wine cellar…. well… one can dream.