Evaluating to buy for rent(invest) an unrenovated prewar appartment in a well choosen CONDO and considering the burden and costs of renovating (permits, time, expenses ,rentals lost while renovating and others), do you guys know of any wise-investor's rules on these two issues: 1)On how to accordingly price that buy, based on the needed renovation? and 2)On how far to go or when to limit that... [more]
Evaluating to buy for rent(invest) an unrenovated prewar appartment in a well choosen CONDO and considering the burden and costs of renovating (permits, time, expenses ,rentals lost while renovating and others), do you guys know of any wise-investor's rules on these two issues:
1)On how to accordingly price that buy, based on the needed renovation? and
2)On how far to go or when to limit that renovation investment?
I wonder if there is (i.e.) a 'limiting rule', based on a percentage of the adquistion cost, or in the value added expected, or if the limit is given by a multiple of the expected rent after renovation,etc.
If any of that exists, it would be helpful to accelarate decissions when considering unrenovated nice prewars...usually experience rules don't fail...what can you say?
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Response by kylewest
about 17 years ago
Posts: 4455
Member since: Aug 2007
I think you'll be hardpressed in this market to make most apts work for investment purposes. If one is to occupy the apt for the next 5-10 years and it is more than an investment, that is different. But for pure investment purposes, I think there are many investment vehicles that provide far lesser risk and no monthly risk of you having potentially to lay out cash to address market volitility. NYC rental market is in tremendous flux right now, and anticipating what you can earn from a renting a unit is nearly impossible. Rents are decreasing (rate of decreaase can be debated), more rentals are coming to market steadily as a result of various market conditions, and when this all turns around is questionable. Most renters prefer paying less for a slightly dog-eared place versus paying anything like a premium for a renovated place. To renovate a prewar will be an expensive undertaking often. It isn't just putting in new appliances and bathroom fixtures. Wiring is an issue, electrical upgrades are commonly needed, decades of paint buildup on walls/mouldings/casings, walls and ceilings that can be a mess: doing a 1/2-baked reno will still leave the place feeling beaten up and this means renters unwilling to pay a premium that would allow you to begin recouping your investment. Then, by the time you go to sell, the 1/2-baked reno will have aged and recouping costs will be quite difficult.
I don't see RE as a good investment for most people right now if they are simply looking to diversify a portfolio. If you are looking for a residence for the long term, then the calculus is different and an apartment is not comparable to a stock or bond that you don't live in.
Very curious if others weigh in on this with a differing view.
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Response by bela
about 17 years ago
Posts: 183
Member since: Jul 2008
Kylewest, are you a fan of stripping and then painting walls or skim coating them? Also I read that you did you kitchen and I think awesomely. DO you know if by code one is allowed to put the stove right in fron of the window. Any thoughts on something like that? I would appreciated your response.
As for the original post I think that buying RE to flip is just too risky and hard to do in this market. I think we are not at the bottom yet and Wall Street is not done bleeding.
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Response by kylewest
about 17 years ago
Posts: 4455
Member since: Aug 2007
I'll defer to others with first hand experience as to how to handle plaster walls in prewars. As for kitchens, I am unaware of any stove placement limitations with regard to windows. Design-wise, the choice of placing a range or cooktop in front of a window is a little unorthodox, but in a city apt the creative options are admittedly constrained by awkward/tight spaces in many kitchens. Then again, all that heat generated by many popular ranges (semipro and commercial models) may be solved by a window behind the stove in a kitchen that could not otherwise accommodate a range hoood.
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Response by Squid
about 17 years ago
Posts: 1399
Member since: Sep 2008
Bela--
If it's a gas stove, you may be very limited on where you're allowed to place it. Many buildings will not permit gas lines to be extended to run under floors, so there's not much option to move the stove far from its original location. You might want to check on this with your building.
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Response by kylewest
about 17 years ago
Posts: 4455
Member since: Aug 2007
Re Gas Lines: The real issue is the footprint of the kitchen for most coops. Many will not permit a footprint to change because a kitchen is considered a "wet" area and most buildings won't let a wet area to be expanded over an existing dry area. Within the footprint, however, many things are possible. If you are doing a gut reno and tearing up floors and walls and the like, moving a gas line is a fairly simple affair in the scheme of things. I dragged mine across the kitchen to the opposite wall and moved the stove from the wet wall with the sink to across from the sink. The coop I'm in is typical of many with moderately restrictive rules but reasonable overall. The board and building engineer had no issue with the gas line moving.
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Response by bela
about 17 years ago
Posts: 183
Member since: Jul 2008
THANK YOU kylewest and squid.
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Response by 30yrs_RE_20_in_REO
about 17 years ago
Posts: 9913
Member since: Mar 2009
I'm pretty sure you can not place a range in front of a window under curreny code.
I think you'll be hardpressed in this market to make most apts work for investment purposes. If one is to occupy the apt for the next 5-10 years and it is more than an investment, that is different. But for pure investment purposes, I think there are many investment vehicles that provide far lesser risk and no monthly risk of you having potentially to lay out cash to address market volitility. NYC rental market is in tremendous flux right now, and anticipating what you can earn from a renting a unit is nearly impossible. Rents are decreasing (rate of decreaase can be debated), more rentals are coming to market steadily as a result of various market conditions, and when this all turns around is questionable. Most renters prefer paying less for a slightly dog-eared place versus paying anything like a premium for a renovated place. To renovate a prewar will be an expensive undertaking often. It isn't just putting in new appliances and bathroom fixtures. Wiring is an issue, electrical upgrades are commonly needed, decades of paint buildup on walls/mouldings/casings, walls and ceilings that can be a mess: doing a 1/2-baked reno will still leave the place feeling beaten up and this means renters unwilling to pay a premium that would allow you to begin recouping your investment. Then, by the time you go to sell, the 1/2-baked reno will have aged and recouping costs will be quite difficult.
I don't see RE as a good investment for most people right now if they are simply looking to diversify a portfolio. If you are looking for a residence for the long term, then the calculus is different and an apartment is not comparable to a stock or bond that you don't live in.
Very curious if others weigh in on this with a differing view.
Kylewest, are you a fan of stripping and then painting walls or skim coating them? Also I read that you did you kitchen and I think awesomely. DO you know if by code one is allowed to put the stove right in fron of the window. Any thoughts on something like that? I would appreciated your response.
As for the original post I think that buying RE to flip is just too risky and hard to do in this market. I think we are not at the bottom yet and Wall Street is not done bleeding.
I'll defer to others with first hand experience as to how to handle plaster walls in prewars. As for kitchens, I am unaware of any stove placement limitations with regard to windows. Design-wise, the choice of placing a range or cooktop in front of a window is a little unorthodox, but in a city apt the creative options are admittedly constrained by awkward/tight spaces in many kitchens. Then again, all that heat generated by many popular ranges (semipro and commercial models) may be solved by a window behind the stove in a kitchen that could not otherwise accommodate a range hoood.
Bela--
If it's a gas stove, you may be very limited on where you're allowed to place it. Many buildings will not permit gas lines to be extended to run under floors, so there's not much option to move the stove far from its original location. You might want to check on this with your building.
Re Gas Lines: The real issue is the footprint of the kitchen for most coops. Many will not permit a footprint to change because a kitchen is considered a "wet" area and most buildings won't let a wet area to be expanded over an existing dry area. Within the footprint, however, many things are possible. If you are doing a gut reno and tearing up floors and walls and the like, moving a gas line is a fairly simple affair in the scheme of things. I dragged mine across the kitchen to the opposite wall and moved the stove from the wet wall with the sink to across from the sink. The coop I'm in is typical of many with moderately restrictive rules but reasonable overall. The board and building engineer had no issue with the gas line moving.
THANK YOU kylewest and squid.
I'm pretty sure you can not place a range in front of a window under curreny code.