Ronda Kaysen in Board Operations on September 5, 2013
"I said, 'You're being silly and you should sell it at market rate!'" says Ellen Kornfeld, a management executive at The Lovett Group, of her conversation with the co-op board. "We got new floors, kitchen, bathrooms, doors, wall coverings. We did everything. We spent $140,000 on the renovation and we sold it for $2.25 million. Not a bad profit, huh?"
Renovating an apartment can add tremendous value if the apartment is in a prime location. Property managers often work with the same contractor who can get lower prices on finishings and materials.
Paint it Grand?
However, in some cases, a simple paint job may make the most sense. A co-op in Freeport, Long Island, has been selling off unsold units for decades ever since the sponsor walked away from 19 units in the 60-unit community. At the time, the co-op feared that the burden of so many unsold units would be a financial disaster. Instead, it has turned into a lifeline. Over the years, it has sold off units to pay for various capital improvements and collected rental income from the others.
"They thought they were looking at foreclosure and bankruptcy," says Steven Birbach, chairman of Carlton Management, whose firm handled the community. "I told them not to worry. I told them we are going to be fine. We rented them out quickly and turned a negative situation into a large positive situation."
But Freeport doesn't command the prices that Fifth Avenue can. So, when units are sold, they often sell for less than it costs to renovate a Manhattan apartment. Therefore, rather than gut-renovate the kitchen and bathrooms, Birbach recommends the building give it a fresh coat of paint, replace the carpet and give it new appliances, which comes to about $5,000. "It makes it sellable," says Birbach. Currently, the building has one unit under contract for $120,000.
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