Maximize Your Townhouse Investment: Part 4
An Excerpt from : Mondays with Dexter
Here is the next in our series of tips on how to grow your long-term townhouse investment.This week’s tip:
Simplify Your Tenant Situation
The most dramatic increase in a NYC brownstone’s value comes when a multi-unit building can be restored to its original single-family layout. Here are some ideas for maximizing your building’s Single-Family Potential.
1) Flexible Market-Rate Leases. If you think you might sell within the next few years, use the standard form REBNY lease, but modify it with a 60-, 90-, or 120-day “vacate on sale” clause. Ask us for a template. This will reassure buyers that their renovations or other plans can begin within a few months of purchase.
2) Be sure to deregulate any vacant apartments. When a regulated tenant moves out, the apartment is not automatically deregulated. You will need to complete and document Major Capital Improvements to increase the legal rent above $2,500 per month. Or you can combine two apartments. The proper paperwork must be filed with the city. If you take the time to go through this red tape before putting up your Manhattan townhouse for sale, it is almost certain to bring in much higher bids.
3) If possible, consider buying out any rent-regulated or SRO tenants. Although this can be pricey, it can potentially get you a much higher price at closing.
4) Begin an “Owner Occupancy Proceeding.” Ask us regarding attorney recommendations. Don’t do it on your own, and don’t be penny wise and pound foolish with a non-expert attorney.
5) If you don’t want to spend money on improving a vacant apartment, consider leaving the apartment vacant. You will be giving up short-term cash flow, but this is generally dwarfed by the higher sale price resulting from not having a resident regulated tenant.
Mondays with Dexter also offers an up-to-date summary of properties that are new to the market as well as those that are under contract or sold, the features they offer, and which ones fit your primary residential or investment criteria.