Author Topic: Seeking opinions--especially from realtors--on value of kitchen/bath renovations  (Read 2795 times)

Offline ljr

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We bought an un-renovated Hawthorne Ct apartment in 2011 that was in pretty good, fairly original shape, and we only made a few, mostly cosmetic improvements (paint, new kitchen appliances, backsplash, kitchen floor, new light fixtures, new window coverings, new showerheads and bathroom cabinets).

Since then, our kitchen and big bathroom have aged even more, of course, and now we are thinking of doing a real renovation on those two rooms. However, we are not sure we will be staying here long-term, and we are wondering if we should spend the money renovating. If we do move, it likely won't be for a few more years at least.

The question is: do you really get the money back when you sell? How many potential buyers want an apartment that needs very little updating vs how many would rather buy an apartment that has not been recently renovated, so they can renovate to their own taste? I know I have spoken to people who had the latter preference and said they did not want to buy someone else's renovation and did not want to rip out a recent renovation because they didn't like it.

Basically, we are wondering if it would be worth it, on the resale, or if we'd be better off just living with the present condition of the rooms till we have a better idea if we will move in the next few years or stay. We'd love a new kitchen and bath--but it's a lot of money. In our former building, though, we recall that some people were unable to sell until they renovated their very old kitchens. But that was in a worse market....

Anyone have thoughts on this?

Offline CaptainFlannel

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^one thing to consider is what is your board's policy about the minimum sale price it will approve. Flip tax is a consideration too, if your coop has one.

Offline ljr

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Captain Flannel--we have no flip tax--never has been one here--and there is no minimum price the board will approve.
We are all on the board as there are only 10 of us, and apartments turn over very infrequently--twice in the past 15-20 years has there been an apartment sale here. Values have gone way, way, up in that time, so anyone selling now would be selling far above what they bought for.

There are no concerns vis-a-vis the coop--just wondering if $40K spent would result in a sale price that much higher.

Offline CaptainFlannel

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ah, sounds like you're in a good position in terms of maximum flexibility!

In my non-expert opinion, I'd wager it's just going to depend on how the market is when you decide you want to sell. I keep an eye on sales in my building, and about a year and half ago (I think) I couldn't believe the prices sellers were getting for apartments with shag carpeting, original cabinets and 1980's era laminate counters, with minimal time on the market (for coops that is). My impression is the market has softened a bit (or that current prices have reached the point where folks are no longer sensing the prices are going to increase at the same rate as the previous couple of years.)

But what do I know? Hopefully you can find an agent with better credentials than my "looks at Realtor.com and MLSLI.com a lot."

Offline ljr

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Thanks Captain Flannel--I was kinda hoping some realtors read the board and would pipe up. I also watch the market obsessively--a hobby. We did renovate our last apartment (not in JH) and wound up very happy with the result--then when we decided we needed to downsize for budget-cutting reasons over a decade later, had to say goodbye to our lovely cherry cabinets, granite counters, new appliances, marble bath, etc.

Our kitchen here is smaller and more cramped, and we'd love to open it up a bit, create more counter space, etc. And the bathroom is just so old it's deteriorating--it appears to be the original bathroom, except for the cabinet over the sink--so it's nearly 100 years old, tub in lousy shape, old tiles missing, old pipes that clog easily and have sprung leaks.

I think most people would have redone the bathroom by now, but we've been trying to avoid the expense for as long as possible. But thinking about it now. Also thinking that doing both together might make a big enough job that we could actually get a good contractor--they don't like to bother will small jobs, I guess.

Offline hum@njukebox1

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I'm certainly no expert, but I've noticed about $100,000 price difference between renovated/unrenovated one-bedroom apartments in the Greystones.  I would think if you talked to one of the realtors, they should be able to give you a very good idea as to the value of the renovations you're thinking about doing.  (The realtors are always sending out mailings.......we get them all the time.)

Offline Simka

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When I sold my coop a few years ago, it had the original '50s kitchen and bathroom. My realtor advised me not to put a lot of money into redoing them because, while I would certainly recoup some of the cost, it wouldn't be anywhere close to all of it. Untimately, even unrenovated, it sold for a lot more than asking price (and the buyers did redo the kitchen and bath).

I realize it may be different now. Sellers seem to be reno happy, and a lot of buyers must be, too, since they keep snapping up redone apartments.

And then there's people like me. I don't like most of the renovations being done these days (knocking out walls, creating "breakfast bars," making everything white or gray, and using laminate or engineered flooring). So if I were deciding whether to buy a coop that had a new renovation I didn't like, I'd have to figure in the cost of me tearing it all out and redoing it—I'd be paying for the seller's renovation plus MY re-renovation.

Offline am315

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Perhaps you should be asking yourself a few different questions:

--How long do you intend to live in the apt?: If you have no intention of moving for a long time, say a decade, then you probably ought not to be considering re-sale value because by the time you sell, your reno won't look as fresh.

--What kind of reno do I want to do? A new kitchen and bath could easily cost $50K for a mid-range reno (i.e. semi-custom cabinets, good brand appliances) but go much higher if you want to add items like a professional cook's range. Plus another thing to consider is that in pre-war buildings plumbing is the X factor. Most of the plumbing doesn't meet current codes so you'll spend a lot to replace it and bring it up to code.

Ultimately, as someone who has bought a bunch of apartments and reno-ed a few too, I think you should do it first and foremost for yourself, because you'd get some joy out of it and it would make you happy and you want it. Re-sale should come second.












Offline ElmCourtGuy

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I also watch the market, but not this board.  I guess that is why I am still a tourist. I am a broker with Corcoran and live in Elm Court.  If you do a well thought out, and tasteful renovation you will most certainly see the return when you sell.  By tasteful, I mean not being too taste specific -- think white subway tile bathroom, and shaker cabinet kitchen. And steer clear clear of the sub zero appliances.  GE or Whirlpool is the way to go (not brand specific, just price wise). I have a great contractor if you're intersted.  Feel free to email me directly.

Offline agentarmen

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Hi  ljr

As a real estate professional I try to zero in on the main concern that drives a question. If I am not mistaken, you clearly want to make improvements to your home for yourself and for better resale value, yet you are concerned with overspending on renovation costs. In most cases it’s a very delicate balancing act and proper research and planning is a must.

Good news is that you are in a building with unique features and with a history of healthy resales. We did a 3 bed 2 bath deal in one of the Hawthornes which closed at 940k and generally the pricing range of 2 bed 2 baths at Hawthornes is around 800-850k and 3 bed 2 baths 950-1mm.

The way you would think this out is, take the average sale price of the two types, deduct price of purchase, deduct another 15% of the perceived purchase price for closing costs, fluctuation and margin of error in calculation and you will arrive at a reasonable renovation budget which will keep you in positive equity.

Rough Example:
Say you own a 2 bed 2 Bath at Hawthorne which you purchased at 700k.
Take approximate sale price of 825k minus 700k and minus $12,375 (15% of 825k) = $112,625
Based on the above calculation you would have approximately 112k to spend on renovations without overspending your potential equity. Less you spend to make the same renovation, the higher equity return you would have.

Now, for sale purpose strictly, we generally do a complete consult with an owner to pin point absolutely necessary improvements that would be needed to maximize return on investment. But if you are not in thinking to sell now, but simply want to make improvements you can enjoy, consider following the formula and example above and you can manage your spending risk accordingly.

I hope this is helpful.

Warmly,
Armen
Armen Meschian
Licensed Associate Real Estate Broker

CORE
149 Fifth Avenue, 11th Floor,
New York, NY 10010
t:     212-612-9694
c:     917-848-6928
am@corenyc.com

http://www.JacksonHeightsListings.com

Offline ljr

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Armen, thanks for your reply. I must say that as realtors tend to do, I think you are offering a pretty wildly optimistic valuation for our 2/bed/2bath in Hawthorne Ct. Really?

I follow what's going on, and I was thinking about $100K less than what you mention for a unit that has not been renovated. It's not in terrible shape--just has the original 97-year-old bathrooms and about half the original kitchen, though the former longtime owner put in lower cabinets that don't match the upper ones. So I guess she renovated to some extent decades ago, and we spruced it up with new floor, backsplash, lighting, and appliances. My impression is that a 2/bed/2bath Hawthorne Ct that has a new and high-end major renovation might fetch the price you mention. But ours would be more like maybe mid-700s. No?

I was seeking this information/reassurance mostly to satisfy my husband's worry about wasting money on renovations should we decide to sell and move in the next few years. But since we got in just before the surge in prices, I guess it's kind of moot except in terms of what our profit would be--would it really fetch a higher enough price that it could be considered a good investment? That would help convince him to do it.

We spent in the high 400s for the apartment (we have a mortgage at around $150,000) and we would be looking to do a very modest renovation, spending nothing like the price you mention. We are in money-saving mode in general, approaching retirement. If we found we could not do what we would like to do for less than $100K, I'm sure we would just decide to not renovate.

I think we really should gut renovate the big bath--plumbing is very old--but for the kitchen, we might reface cabinets, get new countertops, and take down half a wall to create more counter space. It's a small kitchen, so we would not be buying a lot of cabinetry or countertop. And we already have new appliances. So just trying to figure it all out. Thanks.


Offline agentarmen

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Hi ljr :)
I don't disagree. I was basing my calculation on perceived renovated value. We closed on this one last July at 735k, and it needed complete kitchen and bath reno: http://www.jacksonheightslistings.com/listings/35-56-77th-street-32/
Still presentable...

With work completed I'd put its value somewhere in low to mid 800's depending on finishes.

Armen Meschian
Licensed Associate Real Estate Broker

CORE
149 Fifth Avenue, 11th Floor,
New York, NY 10010
t:     212-612-9694
c:     917-848-6928
am@corenyc.com

http://www.JacksonHeightsListings.com

Offline jh_coop_buyer

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Rough Example:
Say you own a 2 bed 2 Bath at Hawthorne which you purchased at 700k.
Take approximate sale price of 825k minus 700k and minus $12,375 (15% of 825k) = $112,625
Based on the above calculation you would have approximately 112k to spend on renovations without overspending your potential equity. Less you spend to make the same renovation, the higher equity return you would have.

Warmly,
Armen

In a few months, I plan to sell my current apartment. Now I'm now facing the same question of whether to renovate or not for selling my current apartment and I found out this old thread. In the original discussion, I highlighted the place that I have questions in bold. @agentarmen and others, Why do we need to subtract 15% of 825k. I understand about  5-6% realtor fee, 2% property transfer tax, or 2%-ish flip tax, but still not 15%  in total cost yet. The 15% of 850K is 120K, not 12k as indicated in the original post. I also think this 15% should be applied to the difference of 825K and 700K (since you have to pay 15% of 700K anyway), which will be 22K.
« Last Edit: May 17, 2021, 02:15:59 PM by jh_coop_buyer »