Combining Four Units
So my best friend will be inheriting an 8-unit building in Brooklyn. The units are kinda small and she wants to combine 4 of them (she has 4 kids) and make a nice 4 bedroom for her and her husband on the top two floors and then keep 4 units on the bottom two for…
So my best friend will be inheriting an 8-unit building in Brooklyn. The units are kinda small and she wants to combine 4 of them (she has 4 kids) and make a nice 4 bedroom for her and her husband on the top two floors and then keep 4 units on the bottom two for income. The place is currently registered as an 8-unit. Is this even possible? Does she have to change the CoO? I would imagine not since you can turn a 4 unit brownstone into a 1-family without changing the CoO.
Anyway, we discussed it last night and although now it is just a pipe dream, I thought I would throw it out there to the Brownstoner masses and hope for the best.
combining is not hard and fairly fast too, (as long as the apts are unoccupied) we have the same side by side 8 unit an 1893 blg – mostly just combing the 2 bathrooms into one and eliminating pipes, altering elec lines. nada fuss unless you don’t understand construction and believe whacky costly ideas from your “contractor” or “that can’t be done” poop. How many times have I endured a plumber telling me it was “wrong” to install a sink at a certain height when it was suppose to be some standard height…and it goes on and on if you want to do things your way.
I combined two units that I was living in, owner of the whole 8 unit building and holder of the Rent Stab leases of the 2 apts, leases from the past before buying blg.
One day while having the door open while cleaning I look up and there is a guy standing there and he says, “interesting this is registered as two units.” he wanted to come in, said he was an inspector, a tenant let him in the blg.
Short of it is: I was issued a violation for “illegal housing unit reduction.
I spoke with the HD and replaced the ONE wall I removed and called for a re inspection – “we no longer do this you will have to comply upon selling the building” I almost stroked out.
We then had an architect friend draw up plans – before and after and submit, rejected. We gave up. Will deal with it whenever we sell if ever! I own & I live there but I cannot combine!!! Illegal reduction of housing, NYC gotta love how weird it is.
A previous forum post on the topic
http://bstoner.wpengine.com/forum/archives/2009/08/eviction_for_ow.php
and the DHCR fact sheet
http://www.housingnyc.com/html/resources/dhcr/dhcr10.html
“…notice must be served at least 90 and not more than 150 days before the current lease term expires” so if the 4 apartments don’t have similar lease expiration dates, it could take a very long time. Additional rules apply to senior citizens and disabled persons.
In the Economakis case (defendants attempting to take a 15-unit building in the East Village for personal use) courts ruled that there’s no limit on the number of apartments an owner can take. Still, she could end up going to court for multiple holdover cases, battling it out for years to accomplish this.
Offer to buy stands if she doesn’t want to take on this struggle and is considering selling. 🙂
Also note that your friend inherits the building with a step-up in basis – so if she gets a million dollar building and sells it for a million bucks no capital gains taxes are due. (As opposed to if the previous owner bought decades ago it for and has a 100k cost basis and sold it for $1M, they would owe tax on the gain). She should confirm with an accountant or tax pro.
If she wants to consider one of brokelin’s suggestions and sell it (tax free) and buy another place to live, I’ll pay 10x the rent roll (possibly more depending on location, condition, etc.)
For those wondering, it is a true 8 unit building with one apartment on either side. We discussed how it would be awkward to combine them, but what an awesome project for a good creative architect to do. I told her about finding something elsewhere, but apparently they are rent-stabilized, so she wants to move into the four apartments together and owner occupy them as the rule allows. She would never be able to afford such a space otherwise so she figures its worth the expense and headache so she can have the space for her family.
Tsarina,
Did you have to evict anyone from the building to move in as owner? How was that?
8-family buildings usually have apartments on either side of the stairwell. This can make for an extremely awkward apartment layout when combined – and that’s true when you are just combining two. Though if it is a brownstone, and thus likely originally a one-family, or if it was originally just 4 units, and you are just combining 2 floors, that would make a nice owner’s apartment.
If I inherited such a building (a true 8-flat, not a cut-up brownstone), I’d think about keeping it as a rental building as an investment (renovating apartments when they became vacant, or with tenants in place if they wanted the renovation), or selling it (though I’d try to keep if I wanted the hassle of being a landlord to a multi-family building), and look for somewhere else for my family to live.
Important questions (though these would be important to ask even if one wasn’t combining apartments) to ask are (1) Does the building have positive cash flow as is? (2) Does the building need a lot of work, aside from any renovation plans?
I would think this sort of extensive renovation could only be undertaken by someone with a lot of cash (even in a brownstone), and even if I had it, I’d wonder if this was the best use for it. I would think it might be more cost effective to find the space to live elsewhere, using the resource of the inherited building to help out with the financing of that.
That’s assuming some of the tenants are rent-stabilized, or rent controlled, and aren’t likely to be going anywhere soon. If the tenants were to leave, or be amenable to being bought out, that changes things, though the awkward layout issue in a true 8-family building remains. If the tenants left, and a full renovation could be done, I’d think about renovating into larger units (making the two small apartments on the lower floors into one unit), possibly even turning the building into condos if I had use for some ready cash.
Oh snap! I bought an 8 family and think I have all the answers.
1) make sure you are not a corporation when you inherit the building. A corporate entity cannot evict tenants to get space in the building to live. You can incorporate after you get your space. Talk to a knowledgeable accountant.
2) Rent stabilized tenants are entitled to stay and get their leases renewed, unless their apartments are going to be used by the owner for his residence. (see number 1#) Those remaining apartments remain rent stabilized until the legal rent reaches the $2000 limit, even though there are fewer than 6 apartments in the building.
3) It is in your best interest to get those remaining apartments vacant so you can renovate and of course add 1/40th of the renovation costs on to the legal rent to get to the magic $2000 destabilized number.
4) the taxes on a legal 8 family building are much higher than on a 5 family building. Again consult your accountant on this one.
I hope I have been helpful.
I would think you are going to be stuck having to change the C of O. The work is going to affect half the building. You have other issues to think about other than that though. You might be looking at full sprinklers and bringing the entire building up to date with the energy code. Hire an architect, there are several of us here on the board.
Jock deBoer AIA
There is no official limitation to combining apartments so it is possible to do it wothout a c. of o. change. Sometimes though the DOB will force you to file multiple applications for each combination on every floor.