Space is at a premium in most big cities across the country. Anyone with a big family who needs three or even four bedrooms is, more often than not, going to be out of luck trying to find an apartment that offers that amount of space. So, what’s a big family to do? How about buy an entire apartment building and convert it to a single family home?
As The Wall Street Journal reports, some families (those that possess the financial means to do so) are purchasing three- and four-unit townhouses and apartment buildings and converting them into 3000- and 4000-square-foot homes. And while it may not be for the faint of heart, financially speaking, many real-estate agents and appraisers say these types of renovation projects can have a huge upside when it comes to resale value.
Turning a multifamily dwelling into a single-family home isn’t all creampuffs and rainbows, though. Some buyers focus on buildings that are already vacant while others buy out the tenants or wait for them to move out or (more morbidly) die. But even the vacant buildings come with some issues. Permit-approval processes can take years to complete and in places like San Francisco, housing laws make removing units from the market so hard that it is rare for a conversion to actually materialize.
Not only that, but even if renovations get under way, they can cause headaches that all the Tylenol in the world couldn’t cure. Apartment buildings typically suffer more wear and tear than single-family homes. Coupled with the fact that some of these buildings were built almost 200 years ago, and the renovation costs for updating amenities and fixtures can add up quickly. Often times, buildings need to be gutted, reconfigured, and updated. Some buyers who are in the process making these transformations said they are going to end up paying double what was originally anticipated.
It isn’t just individual buyers who are renovating multifamily buildings into single-family homes, either. Developers are getting in on the action, too. Greystone Development development paid $10.45 million for a New York apartment building in the West Village and spent two years renovating the10 apartments into a 7,000-square-foot, six-bedroom home. The property then sold the same day it was staged for $21 million.