Part 3: Ready For Sale
A: Well the apartment is finished and ready for the open market once the new year begins. The floors came out great, the paint job neatened things up, and the cleaners finished it off. I also removed the security cage on all the windows as it was limiting the amount of sunlight the apartmet gets. I'll just keep them in the closets for the new buyer to either throw away or re-install. Although we could have done more work to this apartment, there really wasn't any point. Here's why!
A while ago I wrote a post about renovating in a cooling housing market touching base on why high end contracting just doesn't make much financial sense. I stated:
IN A SLOWING HOUSING MARKET YOU WANT TO DO THE LOW RISK HIGH REWARD RENOVATIONS THAT COULD PAYOFF AT RESALE. THESE INCLUDE FLOORS & BATHROOMS, NOT KITCHENS!The reason is that you don't want to spend too much money on renovation work when it's a buyers market in the sense that buyers can negotiate! The headache of going through the renovations process should be rewarded at resale as you get a premium for not only the upgrades you installed, but also the 1-3 months of paperwork, noise, dust, and migraines that come with it.
That's one of the reasons why renovations pay off so well in New York City real estate! But when its a buyers market with the element of negotiability alive and well, that premium could get wiped out! So why risk it!
Here are the 'BEFORE' pictures again of APT 1A at 314 West 56th Street:
And, here are the web ready pictures taken at 1PM on a sunny weekday afternoon:
Its amazing what a few dollars and good photo shoot can do to liven up a place for resale! The floor refinishing brightens the space on its own and gives a great first impression when buyers first enter. The kitchen and bathroom came out just fine when deeply cleaned (although can use a renovation) and the amount of natural sunlight literally doubled when I removed the security cage on the windows. Although the apartment # is 1A, it is actually one floor up giving you a view of other unit's garden level below.
By keeping costs and the 'amount of work' low, we should be able to maximize profit at resale and still get top dollar for what alcove studios in midtown west in a well-maintained elevator building are getting. Time will tell. I'm hoping to provide my client with a buyer within 10-12 weeks for this one.
If we would have decided to renovate the kitchen and bathroom, it would have cost aproximately $30,000 - $35,000 in materials and labor and about 6-8 weeks in total for paperwork, architect work, board approval, and contracting. We would have added $50K to asking price and ask $400,000 instead of $350,000, and HOPE to get at least $50K more than if we didnt do the work; $35,000 for work + $15,000 premium for renovating!
I think we made the right choice by minimizing work done and pricing right at $636/sft, as the low monthlys should convince someone that buying this property is better than renting!
What do you think? A mistake? Should we have done more work?