Buying Advice
This may be naive but I am looking at a brownstone shell in Clinton hill. Asking price is 650K needs extensive renovations. I think its a huge deal, others say its not possible. Anyone have some basic figures? I am 28 years old, renter. This would be a dream come true and I think the…
This may be naive but I am looking at a brownstone shell in Clinton hill. Asking price is 650K needs extensive renovations. I think its a huge deal, others say its not possible. Anyone have some basic figures? I am 28 years old, renter. This would be a dream come true and I think the iron is hot to strike on a good buy with these economic situations. I have always had great real estate foresight with no capitol, and now I have some. if we could muster the buying price, what does a full house renovation look like>?
It is possible to buy a shell with a partner and reno it. I’m planning on doing it myself and have gotten fairly far into the process, but prepare yourself for a steep learning curve and a huge time suck the size of another full time job.
So you can do it as “tenants in common.” There are lots of house in FG/CH owned under this arrangement. Basically it’s like a two party coop, with all of you on the mortgage. It’s definitely wise to work it out the details with a lawyer. Our lawyer, Zerline Goodman, who has handled many TIC agreements offer to hammer out our contract as part of the closing costs when we found a place. She’s great. If you want to move forward, I definitely recommend calling her.
Also, if the house is a shell, you may have to get a FHA loan to finance the purchase and reno. If the place isn’t habitable, you can’t get regular financing. The borowing limit on a two family is 800k and they only require somethig like 4% down, but that would only leave you 150k for your reno. Depending on the size, this isn’t much. A general rule of thumb is 100k per floor for a gut reno. All the quotes I’ve gotten for my own project fell fairly close to that. Of course you can do it cheaper, but if you want to split the utilities and have separate heating, elec, and hot water for each unit (which will make converting into condos easier down the road for reselling) then it will be hard to come in too much under that number. Also, there is a lot of oversight required for FHA loans, and the work needs to be done in a specific time frame, making it harder to do it on the cheap or to drag it out. But it is possible if you are willing to put in the time and effort. There’s tons of information and knowledgeable people on this forum who can help guide you through all of it. Good luck!
The other thing to consider is the mortgage itself. Most banks won’t give you a loan if they think the house is a wreck for that kind of money or they may only release a part of the money with more released on successfully getting a C of O. You may want to start discussing this with a lender to make sure you can get the money you need.
I’m in the middle of a renovation of a 2-family three story brownstone in Bed Stuy. How much your renovation costs is up to you and your neighborhood.
My partner and I are quite handy and our neighborhood is relatively relaxed, so our renovation is going to come in at around 200K and that includes everything, new elec, new plumbing, lots of structural work, every single surface new, 2 new boilers, etc etc.
It does not include fancy surfaces or kitchen/bath excessiveness, or things like permits and architects, which fussier neighborhoods seem to require. This price would be close to impossible if we didn’t find a smart, flexible GC who is good at working with us as if we were subcontractors (as we are doing a good amount of the work ourselves).
We are living here and chipping away at this project over many years, hiring contractors as we can afford it. This strategy is dusty and gross, and not for everybody, and if we were working with another couple, we would have killed them by now.
I think it’s important to understand that there are a lot of ways to skin the cat, and also that it’s a surprisingly stressful project, and plan accordingly.
I would buy something now if I could get a mortgage. I think it’s a good time to buy.
I would never work with friends on a gut that is supposed to be our homes. There are too many surprises, everybody gets more tense than they think they would because it’s about Losing Control and about Home at the same time. The situation presents too many opportunities to loose a friend.
I would personally sit down and think about what you can offer: do you have labor and time or money? Do you have specific skills? Don’t do what I did, really think about how your life is going to unfold while this project happens.
And I would buy a gut job only if most of the gutting has already kind of been done–don’t buy something that’s got layers and layers of drywall all over it and dropped ceilings and such. You want something where you can see the actual bones of the house. Otherwise you are not going to make a smart decision.
And I would personally not, in this market, pay more than $500K for something in that condition in Clinton Hill–$400 or less in Bed Stuy. Realtors are such liars. Get a good deal, you’ll need your money.
You can renovate a kitchen for less than 20 k. Of course you can. We put in an Ikea kitchen where there used to be a bathroom for maybe 3,000. Still have some backsplash tiling to do, but otherwise it works well for us ! You sound like you cannot afford high end renos – neither could we. We also work full time, have 2 kids and have no time to reno ourselves . We used locals and craftsmanship may not have been always great, but well worth the $ saved….
You can renovate a kitchen for less than 20 Uk. Of course you can. We put in an Ikea kitchen where there used to be a bathroom for maybe 3,000. Still have some backsplash tiling to do, but otherwise it works well for us ! You sound like you cannot afford high end renos – neither could we. We also work full time, have 2 kids and have no time to reno ourselves . We used locals and craftsmanship may not have been always great, but well worth the $ saved….
think I know which bldg you’re referencing. I walk / drive by that block often. It’s been boarded up like that since I remember 1st seeing it in 2001. It’s an eyesore for the block. Squeeze ’em hard. No way it’s worth 650k. for non-developer buyers, can’t see anyone offering more than 500k. Good luck.
The listing is with Cen21 but its not on the website yet. I am going to meet with them on Friday so I will see if I can get some pics up. yeah the co-op idea is not fleshed out, its just a thought. Everything is in the “Hey that place finally went for sale…” stage and I am just lkicking around possibilities. All these numbers are very helpfull.
This kind of rehab takes one to two years. You will have to live elsewhere while the work is done. So if you have a spare half million to million and want a modern house, I’d say go for it. Use an architect, obviously.
jvanderb,
In one of your follow up posts you said:
“we are talking to close friends about co-oping it between two couples…”
I would caution you to sort all that out well before hand, contracts and the like. Who is paying for the renovation? Who has final plan approval? Are you doing it all and then selling them a unit? Definitely consult a lawyer if you decide to move ahead. Filing the papers for condo or co-op could be in the $10,000 range. You could also try “tenants in common” if that is still a viable designation.
Think long and hard about this and be clear with the other couple what the renovation costs will be and who covers what, etc. Doing a joint project from scratch with this kind of cash involved can get real ugly real fast, regardless of RE knowledge or the closeness of the relationship.
Can you post a link to the listing so we can see pics?