Renovation Rewards

NEW YORK (Saturday, August 20, 2005) - In this hot market, tales abound of homeowners who, with the help of a good contractor, have flipped their pads for serious cash. In one recent sale in Manhattan, an owner spent $40,000 on renovations - and scored a profit of $248,000. (See sidebar, below.)

But before you rush to knock down walls, install indoor fountains and add that wall-to-wall plasma screen, check out our guide to which renovations bring the most bang for your buck.

Kitchen: Jonathan Miller of the appraisal firm Miller Samuel said that kitchen or bathroom renovations, typically, at least recoup their cost, and often bring more in the New York City market. But updating the odd appliance here or there won't cut it in today's hot market.

Brokers say the place you cook needs to look brand new to attract top dollar. That means stainless-steel appliances and new cabinets are de rigueur, as is some sort of stone countertop.

Granite is the most common, although other types such as limestone are acceptable. But they should be sealed properly because stone is porous. Marble is not generally recommended because it is softer and scratches easily.

Cost: Corcoran broker Daren Herzberg, who has himself renovated and sold many apartments in the last few years, says for the standard 700- to 750-square-foot one-bedroom Manhattan apartment, the standard 8-foot-long galley kitchen can be overhauled for about $25,000. That ought to add $50,000 to the resale value.

The figures jump up when you're talking two- to three-bedroom apartments because of their higher value.

Richard Grossman, director of downtown sales for Halstead, says buyers of those higher-end apartments demand more luxury, so the price range moves to $50,000-$75,000. For that money, you should get top-end professional-chef-level stainless appliances, like Sub-Zero refrigerators, which start at $4,000-$5,000, as well as monster stoves and ovens like Viking or Wolf, which start at $5,000-$6,000.

Cabinets should be custom-made, with a contemporary, sleek look, preferably by a European maker like Poggenpohl, Varenna or Boffi.

The higher-quality cabinets will have better hardware, drawers will glide smoothly, cabinet doors will close flush to the frame and there will be space-saving compartments for food.

Grossman estimates these fixes will return the owner $75,000-$100,000.

Bathroom: Bathrooms should be updated all over, not piecemeal. Get a higher-end stone or tile finish not only on the floors, but on the walls as well - Herzberg recommends at least halfway up the walls, preferably up to the ceiling.

You can use a variety of materials, such as marble, glass or stone tiles, or ceramic. The trick is not to deviate far from universal, neutral color palettes - it pays to stick to white and beige.

Also, buy new fixtures and a new vanity. The shower should have a thermostatic control, so the user doesn't have to fiddle with the cold and hot to get the temperature just right.

Cost: Herzberg says all this can be done in a one-bedroom for $10,000, and ought to return $20,000 in resale value.

Grossman and Herzberg agreed that larger apartments with more than one bathroom have the option of removing the tub and replacing it with an oversize shower.

"Fewer people are taking baths because tubs are not at the premium they used to be. If you're going to replace one, though, make it a nice, deep-soaking tub," said Herzberg.

For the bath in a larger apartment, Grossman estimates a designer redesign can run from $25,000-$50,000 and return from $30,000 to $60,000.

Floors: Both Grossman and Herzberg advise either refinishing or completely replacing your floors, depending on their wear and tear.

There are many acceptable varieties of wood, from the old standby oak, to maple and teak. Herzberg recommends using planks at least 3 inches wide.

Cost: For the wood itself plus installation, Herzberg estimates the cost is around $10 per square foot. So new floors in a 700-square-foot apartment would cost $7,000; you could expect to recoup between $15,000 to $20,000.

Jason Brotter, a Manhattan investment banker who renovates as a hobby (he's with the buyers of a townhouse he renovated, upper left photo), says that a rule of thumb is that the labor or laying and refinishing the floor will cost as much as the material itself.

Walls: A fresh coat of paint isn't enough; any trouble spots should be patched with fresh Sheetrock, or by adding a fresh coat of plaster - a practice known as "skim coating" the walls.

Crisp, even walls, with no bulges, cracks or peeling paint, add an intangible "wow" factor to an apartment.

If you don't want to do jobs like skim-coating yourself, one place to start is to ask your super for recommendations. Or you can try a franchised handyman service like House Doctors (www.housedoctors.com), which does a bit of everything.

Mark Rommel, the owner of the Westchester franchise, suggests that you ask your contractor to walk you through the process of how the job will go and what will happen.

"When they have to describe it step-by-step," he says, "you'll get an idea if they know what they're doing."

Cost: Herzberg estimates the cost for patching any irregularities and painting a 700-to 750-square-foot one-bedroom will run between $3,000 and $5,000, and can return $10,000 to $20,000.

Outdoor space: Because outdoor space is a rarity in the city, it always fetches a premium. Whether roof space, a terrace, balcony or a patio, experts agree it pays to have it landscaped nicely, put down some sort of flooring - either wood decking, or concrete pavers or stone - with some outdoor furniture.

"You don't want to rely on the buyer's vision - they don't have vision," says Herzberg. "You want to show them something beautiful and not explain to them what could be beautiful."

Cost: Spaces vary widely, but Herzberg estimated redoing 100 square feet would cost about $5,000, and return $15,000 to $20,000.

In addition to these key fixes, make sure that when you add, you don't end up subtracting.

Miller says that when valuing a property, he looks to see if an amenity actually adds value.

"It's not a function of the cost. If you do an extensive renovation and 99 percent of the buyers coming through don't see any value, or if it's not consistent with the type of apartment, they'll be thinking how much it will cost them to rip it out.

"You might have spent $50,000 on those pink or purple built-ins, but they are really worth minus $5,000 - the cost to rip them out."

THE BIG SCORE, STEP-BY-STEP (SIDEBAR)

Cheryl Eisen, a Corcoran broker, had a client ask her to renovate his 550-square-foot one-bedroom in Tudor City before selling it. She threw out all of his furniture and brought in modern pieces. "Modern sells for more than traditional," she said. "At the end this looked like a nice, modern hotel room - like a Philippe Starck hotel room, like the W - small, but with a really nice finish."

She spent $40,000, and the place sold for $535K - $135K more than an apartment in the building had ever fetched. Here are some of the fixes that contributed to the big score.

new chrome-finish refrigerator (think Sub-Zero clone): $800
new granite counters, cherry-wood cabinets and tile floor: $6,000
new convection oven, stovetop and dishwasher, all in chrome finish: $1,500
floor-to-ceiling Italian-marble tile; new pedestal sink;
medicine cabinet light fixture: $5,000
door stripping, to reveal the original metal on four doors: $3,200
refinished wood floors: $800
Ikea furniture: $6,000
Installation of built-in shelves, plus painting: $16,000

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