Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.
When prospective home buyers are looking to buy property in New York City, it’s usually a co-op or condo apartment. However, some buyers also look at townhomes for sale, just as they purchased a house in the suburbs. Buying a townhouse: what does it take, and what pros and cons? Despite its price, a townhouse offers many good things. These include privacy and the rare opportunity to own outdoor space or a garden. These features appeal to couples with children or who are in the process of starting a family. How much is a townhouse for sale in NYC? Where are the most beautiful townhouses for sale in Manhattan, NYC?
Real estate investors are also turning to townhouses because they can convert them into rental properties. On top of that, townhouses are unique, and they are often landmarks and have historical details you can’t find anywhere in dwellings in New York City.
Homebuyers covet them because they are rare. And those who live in them enjoy vertical living and the ability to make renovations without getting board approval.
What if you wanted to rent a portion of your home? We’ll let you know everything you need about townhouse living in New York City.
Townhouses outperform co-ops and condos as New York City’s real estate market has reawakened since the pandemic. Homebuyers who currently live in apartments want their own space to avoid contacting Covid-19. In a co-op or condo building, you share germs found in a lobby, elevator, staircase, and hallway with countless other neighbors.
A townhouse is a multi-floor property that is a private home. Typically, it shares walls with an adjacent building, which is often another townhouse. It has its entrance and is usually found in New York City and Brooklyn neighborhoods.
A townhouse also eliminates neighbors above and below you when you live in an apartment unit, which means you don’t have to worry about those who live beneath you who keep complaining that you’re making too much noise.
There are brownstone, limestone, and brick townhouse. The most popular townhouse is the brownstone, and the iconic brownstone is a brick row home finished with reddish-brown sandstone.
The second most popular townhouse is the brick townhouse, which has a brick façade. Brownstone and brick homes can be more than 200 years old, built in the 1800s or early 1900s. As such, they have a historic appearance. Notable brick townhouses feature architectural embellishments like ornate trim above windows and entryways.
Unlike co-op or condo owners, townhomes don’t come with amenities. You don’t get a white-glove doorman who can receive your packages or keep spare keys if you’re locked out. And that superintendent and whom you rely on to change a light bulb from a light fixture you can’t reach? Well, you have to give up what they each offer: convenience.
A condo or co-op requires you to pay monthly common or maintenance charges. While prices vary for each apartment, they are often expensive and cost around $20,000 annually.
The owner is responsible for every part of the house. These include checking the boiler and HVAC, the furnace, the plumbing, the roof, and the driveway if any. All of which are costly to maintain and repair.
And if the water heater breaks or the roof develops a leak or needs replacement, you will also have to pay for these expenses. You also have to sweat the small stuff like maintaining the front yard grass, shoveling your snow on the steps, salting your icy sloop, taking out your garbage, and putting it on the curb.
As per New York City guidelines outlined on the NY.gov site, you are responsible if someone slips on ice on your sidewalk and gets injured. And if a tree in front of your townhouse has a root that comes up and lifts part of the sidewalk, you will also be responsible if someone trips over it.
In short, townhouses can be very expensive to maintain. But on the other hand, if you want to renovate your townhouse, like update the kitchen, you don’t need board approval as you do in a co-op or condo.
Brokers describe New York, NY townhouse square footage in terms of width and depth. The width of some townhouses ranges from 13 to 25 feet, while others run between 16 and 20 feet wide. Homes wider than 18 feet are precious real estate because you get more house space.
And homes wider than 20 feet, rare to find, are called “trophy” townhouses. Some real estate agents refer to more expansive townhouses as “mansions.”
In general, the wider the townhouse, the more valuable it is. Many factors affirm this. There are more windows with a trophy house, which brings in a ton of natural light and makes it airy. There’s better room flow, more space for a giant and safer staircase, and the entire house is easier to design or furnish.
In a single-family townhouse, only one family can occupy it. The owner can rent the entire house for rental income, but only one family can live in it again.
If you’re lucky enough to be able to buy your townhouse in New York City, then you’ll be one of the few New Yorkers who will be able to have no neighbors within your building or board members to deal with. You’ll never have to worry about internal politics or co-op board fines and rules. Given how small-minded some people can be, it’s a great relief to be able to be the master of your own house.
However, buying a townhouse in NYC is akin to buying your typical, free-standing house in the suburbs. You won’t have a managing agent to manage the property, so you’ll be responsible for all the maintenance and repairs. That means you’ll be responsible for calling and hiring contractors to get the boiler fixed, repair the roof, and so on. Furthermore, you’ll have to keep a close eye on how fast your property taxes are rising.
Buying a townhouse in NYC may mean hiring a tax certiorari firm or going through the complex process yourself. You should double-check the Certificate of Occupancy (C of O or CO) for the property to confirm that the building designates single-family occupancy. Remember that a townhouse or brownstone is a property style and has nothing to do with how many legal units the building consists of.
A multi-family townhouse is a home containing at least three dwelling units, and a building with two dwelling units is a two-family residence. Often smaller, two-family townhouses will have an owner’s duplex or triplex at the top and a garden apartment or a duplex at the bottom to rent out.
If you buy a multi-family townhouse, you can convert it to a single-family house if needed. Also, you can buy a multi-family home as an investment property and live in the townhouse while you have tenants from which you can collect rent.
Or you can rent out the entire townhouse as an investment property, which allows you to collect more rent and may even pay your monthly mortgage in whole or part. Regardless of the layout, living above your tenants is generally better, so you’re less likely to be disturbed by noise. Besides the ability to earn rental income from a relatively stable asset vs. the stock market, buying investment property in NYC has many other great benefits, such as the ability to expense almost any costs associated with the property.
For example, let’s assume the property is fully rented out and you are not living in any of the units. Therefore, you can deduct the mortgage interest, common charges or home owner association dues, property taxes, property insurance premiums, and cost of maintenance and repair against your rental income.
Furthermore, residential property investors can fully depreciate their cost basis over 27.5 years.
First, the first thing you should do when contemplating buying a townhouse is to check the Department of Buildings website. The DOB features records of construction permits, code, and zoning violations.
The potential homebuyer should look for open permits or violations and court records. The buyer can find out if there are any existing liens or judgments and property tax rolls to see any delinquencies. If any of these things are true, you should have them resolved by the seller.
It would help if you also turned to the DOB for the certificate of occupancy (CO). Every residential building in New York City requires one which outlines how a dwelling is used. The DOB is where you obtain a construction permit if you plan on remodeling or changing the house’s structure.
Keep in mind that you need a new CO if you make Renos. Also, your CO requires a change if you turn a multi-unit townhouse into a single-occupancy one. Also, visit the DOB to determine which category your townhouse falls under.
For example, it may look like you’re purchasing a multi-family house during closing or before getting a mortgage approval. But it may be, by law, a single-family house.
Since the DOB keeps records of the legal use of a townhouse, you can discover which properties have been converted from single-family homes. That can cause problems when you begin to secure a mortgage loan or insure the townhouse.
A home inspection visually examines the physical structure of a house, a townhouse, a condo, or a co-op.
A licensed inspector evaluates the townhouse and can give you a report on any existing defects in the home. The inspector looks at both the interior and exterior of the townhouse and the area surrounding it in case of hazardous issues they may come across.
Your mortgage lender will often require you to hire a home inspector. Even so, it would help if you always got your inspector to uncover any encroachments or title issues before you close. If you don’t do the survey, the homebuyer of the townhouse will be solely responsible for such problems.
A review of the structural components of the townhouse is critical. And a qualified engineer, not an inspector, should be in charge of the survey as many New York City townhouses are historical buildings. Because many structural components are listed above, you will use the engineer the most concerning the inspector. Any blemish will be costly to remediate and may damage the townhouse owner’s ability to finance and insure the building.
Note that the prospective townhouse owner is solely responsible for paying the inspector or surveyor. While the bill will be high, you can roll in the costs with your closing costs.
If repairs need to be made, like a leaky roof or plumbing or electrical wiring issues, you should turn to the seller and ask him to repair them before closing. Or you can ask for a credit that can be applied against the purchase price. If the seller balks at either, you may be able to walk away from purchasing a townhouse if your contract stipulates that you’re entitled to a way out.
The two most costly repairs you must keep in mind are the roof and the townhouse’s façade.
The two most common roof issues are leaks and the separation of roof parts. A new roof or the repair of a roof is costly and time-consuming. So before you buy a townhouse, have it inspected by the engineer. (In most cases, a licensed inspector won’t touch the roof).
If there is a roof problem, have the seller fix it. The seller can also give you a report on whether or not the roof has been recently repaired or has some existing problems.
If you purchase a brownstone, note that it’s a porous material that can cause erosion and decay due to environmental factors like moisture. If these happen, you need to renovate the façade to ensure its structural integrity and maintain its appearance. According to Business Insider, a complete façade replacement can start at $70,000 and go up to six figures for a three or four-story townhouse.
And you’ll still need to follow guidelines set by the Landmarks Preservation Commission, which dictates how to properly repair a façade to preserve the historical nature of the townhouse.
The value of your townhouse can be astronomical, in the high millions, depending on where it is located. It depends on how the townhouse backs up to the townhouse behind it, adjacent to the other townhouses, and overall the townhouses across the street.
The value of a townhouse increases in price if it’s on a block with rows of other townhouses on both sides of the street. And if the townhouses have good curb appeal, such as tree-lined streets and quaint sidewalks to walk your dog or mingle on, you’re buying in a desirable area.
Real estate agents and brokers unanimously agree that what brings down the value of a townhouse is if the townhouse is on the same street as a firehouse, a police department, or any school. The reason is that these institutions can bring about traffic and increase the noise level. You can find the most desirable townhouses in the 70s in the Upper West Side, Greenwich Village, the West Village, and the Upper East Side. Also desirable are townhouses in Brooklyn, including Brooklyn Heights, Carroll Gardens, and Cobble Hill.
Buying real estate as an investment property is a great way to make money. But how do you rent out the townhouse you just bought? And are you going to live there while having tenants?
Before you start, determine how much you want to charge for rent. It should depend on the interest rate of your new mortgage, maintenance costs, and licensing fees. More than anything, your rent will be based on comps in the surrounding area. That’s one of the reasons why buying a townhouse in Manhattan, NYC, is a good neighborhood essential.
You should then make up a lease agreement for a prospective tenant so that both of you are protected if something negative occurs, such as the tenant failing to make rent or always having noisy parties. This is the most important thing you should do, so always run it by an attorney to cover even the fine points you may miss.
The tenant should respect your property. If he doesn’t, he’ll likely be a bad neighbor and not care about the conditions of the rooms he’s renting. First, do a credit and a background check. Then, get references from previous landlords and work.
Lastly, interview the prospective tenant thoroughly. If the prospective tenant has a remarkable renting history and has never missed a monthly rent payment, that tenant is a keeper.
Remember that if a tenant defaces your property in any way or fails to make rent, you can’t kick him out. That’s according to revisions made by the Mayor’s Office of Tenant Protection in the wake of Covid-19. The tenant may have lost his job due to the pandemic, and discriminating against him is unlawful.
You become a landlord the moment you start renting your townhouse. As such, you must provide tenants with a good superintendent available to fix problems that may arise. If you’re not handy and don’t know how to unclog a toilet, hire a maintenance “floater” or a communal super who usually works for the entire rowhouse block.
This is a necessity as tenants have rights too. Your rental space must always have hot and cold water; the plumbing must work. You must resolve any mold problem, peeling paint, rodents of all kinds, and bedbugs,
This means you must always make yourself available; if you aren’t, a tenant may take you to small claims court or not renew his lease, which means more work for you to find a new renter.
There are pros and cons if you have existing tenants.
You’ll have immediate cash flow from them and which begins the day you close on the townhouse. In addition, having a tenant also saves you time and energy in finding a new one. More importantly, if there are existing tenants in the townhouse you want to buy, they can lower the purchase price of the townhouse. Townhouses with rent-stabilized or rent-controlled tenants mean you can afford to be in a desirable neighborhood that you perhaps wouldn’t have been able to purchase.
You must honor the existing lease agreement even if it means you’ll take a hit or have rental income below what you’d like to charge. Since the current lease transfers with the property, you can in no way modify the lease, raise the rent, or remove the tenant.
Typically, if your townhouse comes with rent-regulated tenants, note that they generally pay less than market value tenants. Keep that in mind when buying a townhouse with an existing tenant because you are stuck with him for a long time because he is content paying low rent and laws stipulate that he has automatic lease renewal.
If you had planned to transform a townhouse back to a single-unit home, or if you had counted on the higher rent that could cover a portion of your monthly mortgage, it’s not advised to vacate tenants protected by rent-stabilized or rent-controlled rates. That’s because it is a costly and time-consuming endeavor. More importantly, it’s illegal to try any of these without handling them properly or ethically.