In Over My Head?
I am a first time home buyer and I’m looking at a building with two units and a storefront for sale at the same price as my budget for a condo. The building is completely gutted – no plumbing no electricty, and it needs a new roof. Does anyone have an idea how much plumbing…
I am a first time home buyer and I’m looking at a building with two units and a storefront for sale at the same price as my budget for a condo. The building is completely gutted – no plumbing no electricty, and it needs a new roof. Does anyone have an idea how much plumbing costs for a three story building? And electricity? I have a lot of building experience so I would like to do as much of the non-plumbing and electricity work as possible. Am I in over my head? Has anyone done a project like this? What kind of advice can you give me?
Alex, I misread your post — I thought you spent $800k on a _renovation_ of that space. For a full construction, that price sounds completely reasonable.
Eli, I’ll shoot you an e-mail later. We had very good experience with 203(k) and are happy to share. We love our GC so much we can’t wait to have another project so we can bring them in again.
And fawn, you raise a _very_ important point, even if you don’t GC yourself you need a flexible job schedule, which I was lucky to have. Even the best contractors are going to need regular guidance, and it’s best if you can spend some time with them at least every other day.
Eastbloc – I’d love to talk to you about your experience as well. We’re doing a 2-family that needs similar work on a similar budget and would love to hear your recommendations on contractors and material sources. How much did you DIY (or not)? Please send me an email at benbutler78 at hotmail dot com. I’d really appreciate it.
RD684,
Probably the case on rents, but did you get a “standard” residential mortgage for mixed use? THought higher rates and such came in, but that was based on quick convo with mortgage guy a long time ago.
Any other “behind the scenes” additional costs that come with the mixed use designation? Also wonder whether there’s more downside between tenants with the commercial space. Never had a problem renting my apt, but then again, never tried renting commercial space.
Just curious.
Eastbloc-Don’t compare your ~200K renovation to the cost of putting up a new four story steel frame concrete deck building with full height cellar. I doubt your townhouse has a full sprinkler system with 6″ main, 400A three phase service and so on. I will come in at a bit under $200 PSF which includes everything except the land cost.
Hi eastbloc – have a few questions for you about the 203k loan and who you used to restore a 3-family for $200K, although perhaps you GC’d the job yourself? Send me an email eli [at] turner-engineering [dot] com.
To OP – I GC’d a five-floor gut myself and it completely took over my life for a year. Like fawn said, you better have a 3-8 hours free (depending on the day) 6 days a week for the next year to take on a project this size as a first-time GC. And time is never money as much as it is in a renovation where you’re carrying debt for an unoccupied building and pouring tons of cash in every month, so I’d give some serious thought to subbing out more than just plumbing and electrical so you can finish before you burn through all your reno cash just carrying the place.
If you’re hell-bent on doing this yourself, I’d make a rough guess that electrical will be at least 5K a floor, plumbing double that(8-10K/fl), and heating 3-5K a floor in addition.
Good luck!
I think you’re getting a lot of good advice here. I’ll add that I would not take this on unless you have a very flexible work schedule. A major renovation is extremely time intensive, even if you are outsourcing the work. You’ll need to be available for appointments and estimates and, even if you hire a GC, need time to research and communicate the hundreds of small decisions you’ll need to make along the way. Obviously, I don’t know you, but based on the fact that you’re posting questions like these, I think you’re getting in over your head.
Don’t forget to take into account the vacancy rate on commercial properties – it can easily take six to nine months to fill a vacant commercial space. As a first-time home buyer, I’d be more wary of being a commercial landlord than I would of doing the reno work.
I have a 3 story mixed use bldg. and kept the commercial tenant who was there when I purchased the property. Their rent is less than market rate but having a reliable, long-term tenant from day one was a worthwhile trade-off.
I much prefer living on the upper two floors and having income from a commercial tenant, as opposed to a typical brownstone scenario that has a residential rental.
I like not having other people living in the bldg or not having to deal with kitchen, bathtub/shower or other residential issues. Plus I don’t have to heat the store when they’re closed at night or days off.
This might be a debate for another thread but I think there’s a bigger upside for rental income from a well placed mixed-use bldg. on 5th Ave., versus a brownstone with rental income from an apt.
You can do the work yourself on a 203k, but you better have some muscle as you have to wrap it up within six months of closing. Also, you’ll need an architect to draw up plans and get permits.
You can do a 203k on a mixed-used property, although there are some restrictions:
A 203(k) mortgage may be originated on a “mixed use” residential property provided: (1) The property has no greater than 25 percent (for a one story building); 33 percent (for a three story building); and 49 percent (for a two story building) of its floor area used for commercial (storefront) purposes; (2) the commercial use will not affect the health and safety of the occupants of the residential property; and (3) the rehabilitation funds will only be used for the residential functions of the dwelling and areas used to access the residential part of the property.