Should I sell or rent out reno'd apartment?

Planet bubble? I think the agent is nuts. Unless your finished product (1b1b) is worth 1m+, and you're getting it for 300k?

I will offer the owners double!

Why are the owners selling their place more than half a million bucks under market? To answer your question, I'm doubtful that you will be in the happy situation of pocketing 600k.

Also -- closing costs are about 10% -- your math is bad -- especially in this market

I agree with nyc10023 -- have the owners actually accepted your offer?

And why would you put all that work in just to flip it? Renos are a huge pain. And you'll have to pay for another place while they're being done.

If you do get it for a way-under-market price and don't want to live there, you might as well sell it unrenovated and let someone else do the renos to their taste.

Btw, ebony wood floors are already going out of style.

Well, the owner is selling to us because according to her, she is "too old and doesn't want to worry about taking care of it anymore." She bought it over 20 years ago, and it hasn't been rehabbed since and we've been renting for the past two years from her, so that's why we are getting such a great deal. We're getting it for 350k.

Does the owner have kids or other potential heirs?

If so, don't count on her going through with the deal. Because someone will (rightfully) talk her out of it.

so...$350 + closing at $30 + rehab at $175= $555. if you sell at $1.2 million you net $1,140,000 after paying broker 5%. Your profit is $585 K. so, this place will be worth $1.2 million?

What building is this?

My guess is London Terrace. What do you think, KW? 350k is a deal. I don't think you're going to get 600k profit, and I don't think you should dump 150k+ into the place.

My vote is for not renting it out, and pocketing the $.

so funny - here's a post PRECISELY on this topic

http://theapplepeeled.com/sellers/why-this-may-be-a-great-time-to-list-your-property-for-sale-and-not-for-rent/

Let's pretend this question isn't fake, and establish the principle of NO FREE LUNCH.

First, how are you going to get a significantly-below-market transfer through the building's board? It makes much more sense for the building to block the sale, buy the apartment itself, and resell it at a dirt-cheap $625K.

If you really think you can end-run the building, I would consult a tax attorney ASAP. It's quite possible that if you're getting a $700K apartment for $350K, you could be responsible for tax on the $350K you're being gifted.

I know that the IRS would consider a below-market transfer imputed income to you if you were owner's kids.

ali r.
DG Neary Realty

"We plan on putting about $150-200k worth of renovation work into the apartment. We want it to be very high quality - Gaggenau appliances, ebony wood floors, Dornbracht bathroom, marble counters, travertine tile, the works.'

No offense, but to spend that much renovating a 1 bedroom apt. is absurd. You will over-spend and price yoruself out of the market come resale.

I also never heard of Gaggenau so I Googled them. And what you will spend on just one of their appliances is what you should be spending all together on all of your kitchen appliances. $3,200 just for an ovn? Is that really the best use of money?

Thanks for the link, Honeycrisp. Article makes a lot of great points.

you're very welcome, RBSky - there's one post that hasn't yet made it on the blog yet, where we talk about whether to renovate before selling or not ...

as a sneak preview, one argument goes like this: the smaller the unit, the greater the chances of a first time home buyer who won't want or be able to pay for upgrades - meaning renovation might be worthwhile. the larger the unit, the more likely the buyers have more specific needs and would rather not pay for someone else's tastes ... just a theory, though

renovation costs are lower vs peak by quite a bit, so renovations in it of themselves may be cheaper - i'd say you should look at what competing properties are like, where they're priced, and see how your apt compares. keep in mind also that many 1-bed buyers out there are looking for "value" - if they see crazy high-end renos, they might think "these upgrades are definitely priced in, and i don't need them or want to pay for them - i'll settle for something less flashy" ... be careful

the key behind this is understanding the very specific, investment-driven reasoning behind your renovations, and make the decision from there

RBSky?

Take away the "R" and "ky" and you've got the picture...

Hey this flippin' gray comment shit is getting old, SE...

LOLOL Spend $150,000 renovating 700 square feet, over $200 on a square foot basis. How would you recover that? LOLOL

Hi Dwayne. thought you decided you were too good for us. and left in a huff. to quote others.

I am a tax attorney so to answer front_porch's suggestion that you would be taxed on a "gift" portion, there's really no risk of a gift here. You are unrelated parties operating at arm's length. If you're guys are somehow related to each other its an entirely different matter but she made an economic decision, that may or may not be a dumb one, and you were lucky and in the right place at the right time.

Bigger issue is whether, if this is a coop, whether you can get the sale through the board at that price but it really depends on the building.

Hi AR. I am certainly not too good for all of you, only some of you.

WTF? I went to sleep, and when I woke up it was 2006!

So you think you're getting a deal at $500 a sq ft. You'll spend $200 renovating the place, another $50 financing your purchase and renovation for a year, so call it $750 a sq ft. You'll sell the place for $1.2M, using columbiacounty's math, or $1700 a sq ft, and pocket $950 a sq ft for your troubles and your LL's generosity.

How much of that $950 do you think is coming from your LL's generosity, and how much will the market paying you for your efforts? In other words, what would the place sell for as-is on the market right now?

Also, why doesn't the LL simply have an agent sell the place on the market? Very little effort in that, no?

"WTF? I went to sleep, and when I woke up it was 2006!"

LOL. Good one.

wait, aren't you doing the same renovation no matter what you decide on the selling or renting front? If that's the case, then who cares - do the renovation and see where the market is at when you are done.

If it were me, I would just sell it unrenovated for twice the price. Renovations almost never return 100% anyway, so whatever you spend on the renovation (plus the cost of living somewhere else) will eat into your profit, not create incremental profit. Unless the places is a complete disaster, but it sounds like if you're living there now, it probably just needs updating.