Calculating the Value of a Remodel
Calculating the Value of a Remodel
Q. I have owned my one-bedroom co-op apartment for about 20 years. While the value has increased substantially during that time, to as much as $750,000, the apartment is showing its age and could use some updating. I received estimates from contractors ranging from $30,000 to remodel the kitchen all the way up to $130,000 to gut and remodel my entire apartment. I have no immediate plans to move, but should I be concerned about how the improvements affect resale value? If I stay in my apartment for another 10 years, will the updates even be considered improvements anymore? Which improvements have the largest impact on home value?
Upper West Side, Manhattan
A. As someone who bought a home that had not been remodeled since the 1970s, I can sympathize with your urge to update. I also understand your reluctance to part with large sums of cash, particularly if these improvements might show their age by the time you do sell. Nevertheless, if you walk into your bathroom every morning and grimace at the green paisley wallpaper, go ahead and change it. Few buyers would fault you for ushering your home into the 21st century.
“If you have no immediate plans to sell, then any remodeling or improvements you do should be for you,” said Luis Martinez, the owner of Betancourt Realty Associates. “While your home is an investment, more important it is your sanctuary away from your busy New York City life.”
Choose classic finishes like subway tile that will still be popular a decade from now. Let your personal flair shine in elements like light fixtures and paint color, which can be readily swapped when you eventually stage your apartment for sale.
“You don’t want to redo the kitchen and the bath in something that is going to go out of style,” said Paul Zweben, an associate broker with Douglas Elliman Real Estate. “It’s akin to men’s pleated and cuffed pants. Those go out of style, and when they’re not in style, they’re like purple tiles in the kitchen and gold faucets” in the bathroom.
Unless money grows on trees in your neighborhood, select your updates carefully, as the costs of remodeling can quickly spiral out of control, despite how breezy it looks on HGTV. Kitchen and bathroom updates generally improve an apartment’s value more than other upgrades, but those are also areas where an owner can get carried away.
“Everyone thinks renovations are guaranteed to make money. People can’t help it, they’re so excited about their apartment, and it winds up biting them,” said Brian Morgan, an associate broker at Citi Habitats. “If you go high-end on everything, I can almost guarantee you’ll lose money.”
Challenging a Rent Increase
Q. Three months ago, we had a gas leak in our apartment building, and the stoves in all the units were shut off because the gas leak was coming from the line that provided gas to the stoves. Our landlord at the time never fixed the problem, and sold the building, so now there are new owners. The new owners are now saying that after they fix the problem, they are going to increase our rent. What are my rights? Can they increase our rent, even though the problem is with the building and not an appliance within the apartment?
Morningside Heights, Manhattan
A. If a gas line is broken, the owners are required to fix it, even if it broke under a previous owner’s watch. Once the owners fix the problem and restore gas to the building, they could apply to the New York State Homes and Community Renewal for permission to permanently raise rent on rent-regulated units — known as a “major capital improvement” or MCI rent increase. Landlords do not, however, need an excuse or permission to raise rents on market-rate apartments when those leases come up for renewal. They could raise the rent for any reason — or even decide not to renew the lease. As unjust as it might seem, the owners could eventually raise rent on tenants who have been without gas for months.
Rent-regulated tenants, however, could fight a rent increase. For the owners to qualify for an MCI rent increase, they would have to install a new gas line, not merely repair a broken one. Or, if they are repairing a problem caused by a failure to maintain services, the work would not qualify as a major capital improvement, according to Harvey Epstein, director of the community development project at the Urban Justice Center.
If the owners apply for a major capital improvement rent increase, rent-regulated tenants would be given a chance to challenge the application. But “the burden is on the tenants to challenge the landlord’s application for the MCI,” Mr. Epstein said.
Q. The front entrance of our co-op building has two sets of doors. The inner door is closed at all times and can be opened with a buzzer or a key. The outer one is open during the day, but at night it can only be opened with a key. Shareholders have to walk downstairs to let guests into the building. Some residents have raised concerns about what would happen if a resident was too ill to walk downstairs or if a first responder needed to get in. On the other hand, the system prevents residents from randomly buzzing in strangers. We are considering installing a more modern intercom that would allow shareholders to remotely open the door by phone. Is the complete lockdown of the front door even legal? Are there specific building codes for door access?
West Harlem, Manhattan
A. Your co-op cannot keep an entrance door locked at night in the manner you describe; it not only creates a safety hazard, but it also violates city and state rules. The rules require apartment buildings with eight or more units to have self-locking entrance doors. Residents inside their apartments must also be able to communicate with visitors through an intercom and buzz them in. While only one of the doors must meet these requirements, the other one cannot prevent a visitor from accessing the buzzer system, which appears to be the case in your building at night.
“It certainly violates the spirit of the law, which allows residents to communicate with people on the street,” said Steven R. Wagner, a real estate lawyer. If residents are concerned about randomly buzzing strangers in during the night, the co-op could install a system with a video monitor, which would allow tenants to see who is standing outside. A video system costs about $500 per apartment in buildings with more than 15 units, about twice the price of a traditional intercom system, said Yaron Erez, owner of Mr. Locks, a locksmith that services all five boroughs. (For large buildings with 150 units or more, the price per apartment would be less.)
Shareholders fretting about costs should consider the upside: A sophisticated security system would make your co-op more attractive to visitors and prospective buyers — and the shareholders might appreciate the added sense of security. “A modern, attractive intercom system is an amenity that creates a favorable impression when one enters a building,” Mr. Wagner said.