Archive for the ‘Home Improvement’ Category

3 Things You Should Know About The Floor Area Ratio (FAR) Calculation

Wednesday, December 14th, 2016

When researching homes and buildings in New York City on building information sites like RealDirect’s Free Property Reports, buyers and investors will often encounter a field called “FAR”. This stands for Floor Area Ratio and is an important yet confusing term, that typical buyers rarely encounter. This relates to the zoning of the property, and how much “floor space” is allowed on a given lot.

For example, a house at 115 Ainslie Street in Williamsburg has a built FAR of .87 and a maximum FAR of 2. The square footage is 1,738, so this lot can support a total of 2,266 additional square feet – for a total of 4,004 square feet of floor area.

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There are three main points you should understand about the Floor Area Ratio calculation.

1. It can tell you if the property is “legal”. If the actual floor area ratio exceeds the maximum allowed, it is possible that work was done to the building illegally, and a future owner may not be allowed to do work without fixing this – usually by removing the additional structure or getting a variance of some sort. However just because the FAR exceeds the maximum amount doesn’t mean it is illegal. Often buildings that exceed the maximum FAR are “grandfathered” since the FAR rules were imposed after the construction of the building.

2. The difference between the actual FAR and maximum FAR has value. This additional square footage is essentially a right to build (subject to building and zoning rules), and for savvy buyers who are willing to do some work, there could be great upside to properties with additional, unconstructed floor area and high sale price cost per foot.

For the above property, which has sold for approximately $1,000/ft, an investor or “flipper” would typically evaluate the upside opportunity by looking at the cost per foot and determine what the renovated price would be – and if they can renovate at a significant discount to what the market price is on a cost per foot basis for a renovated property, it is worth the cost of the renovation. Here, a $150/ft renovation budget could probably yield an additional $200/ft of value – which is not typically enough of a return to take a risk on a property like this. However, if one can add another 1,500 square feet at $350/ft, the economics make a lot more sense.

It looks like this:

1,738 x $150 = $260,700 – renovation of existing property
1,500 x $350 = $525,000 – additional living space

Now, after this work has been completed and assuming the property has a value of $1,200/ft, the new value is $3.885M. So the value of the additional floor area is nearly $1M.

Of course it’s rarely that simple, but in some cases increasing the square footage has an even bigger impact. In many neighborhoods, there is a premium for larger homes on a cost per foot basis, so by increasing the square footage, you will get a higher price per foot for the entire property vs. a similar smaller home in the same condition.

3. There can be more than one maximum Floor Area Ratio in a given building. Depending on the building and zoning, it is possible that by using the property for a community or commercial facility, you can have a higher FAR. This is done to encourage community facilities in certain neighborhoods. By doing the FAR calculation, you can determine which use type will provide the most value and highest use for the property.

The key is finding a property with a footprint that is conducive to “adding on” to maximize your FAR. Ideally you would want a lot that is wide enough to allow a comfortable layout, and a yard that will allow for an addition and still have enough outdoor space for the residents to enjoy. And if the building is brick, even better, since you may be able to build up with minimal structural and fire safety modifications. But if you can find a property with a FAR that allows for significant build outs, there is a lot of upside potential if bought at a fair price.

*Caveat – consult with a knowledgeable architect to confirm the viability of any project you are considering prior to purchase.

Kitchen Renovations for Resale: What You Get For the Money

Friday, April 24th, 2015

From a few hundred dollars for some paint and new hardware, to a six-figure gut renovation, updating a kitchen can be accomplished in a multitude of ways. Whether your kitchen just needs to be freshened up, or requires a complete overhaul, you’ll want to create a space that works for your own needs and adds to the resale value of your home. We’ve put together this guide to help you determine what your kitchen renovation needs really are and how best to accomplish your goals with an eye to resale.

Before undertaking a kitchen renovation, it’s important to assess your needs. Ask yourself the following questions:

What is my budget?
Does my current kitchen layout work?
What condition is my kitchen in? Can it be refinished, does it need to be gutted, or somewhere in between?

Once you have a clear picture of what needs to be addressed and how much you want to spend, you can move forward with your renovation project.

The Budget Kitchen Overhaul:
kitchen has functional layout, working appliances, cabinets & countertops in good condition
-paint walls
-paint cabinets
-change hardware
bonus – change out flooring, laminate, peel & stick, tile, add backsplash

Entry level renovation:
kitchen has functional layout, may need new appliances, countertops, floor
-paint walls
-paint cabinets
-change out light fixture
-new countertops (laminate)
-change out flooring
-add backsplash
-new hardware
-stainless steel appliances

Mid-range renovation
layout doesn’t work, nothing is salvageable
-new kitchen layout
-move plumbing
-midrange appliances
-rearrange cabinetry
-new cabinets (Ikea or Home Depot)
-new hardware
-new flooring
-new fixtures

High-end renovation
custom everything
high end appliances
architect design

http://www.remodeling.hw.net/2011/costvsvalue/division/middle-atlantic/city/new-york–ny.aspx

budget:
paint
flooring
backsplash
diy

low:
ikea cabinets
tile
stainless appliances

mid-range:
pre-fab cabinets
solid surface countertops

high end:
custom cabinetry
space reconfiguring

Top Home Improvements With the Biggest Return

Thursday, October 27th, 2011

Home improvements top the list of ways to increase the selling price of your home. Whether you’re handy with a hammer or a checkbook, the top home improvements are those with the biggest return on investment. Learning to spot the top home improvements will help your remodeling dollar go farther.

Top Home Improvements: A Return On Investment

Keeping up with the Joneses (sort of). The key to maximizing your home improvement investment is to keep the amenities in your home at the same level as those of your neighbors and in similar homes close by. Check out local open houses and tour model homes in new developments to get a good idea of what the competition has to offer. Your goal is to meet, but not exceed, the level of features available in homes of your size and price range.

From the outside in. If you live in a house, you’ll get a better than 80% return on investment for upgrading the exterior of your home. The top home improvement to the exterior of your home is replacing older siding with energy efficient, low maintenance materials. Save money on your roof—upgraded roofing will only improve your selling price if the roof needed repairs in the first place. (more…)

The Worst Home Improvements to Make as a Homeowner

Thursday, October 27th, 2011

The worst home improvements are those that are expensive, but return very little on your investment. As a homeowner, you may be considering home improvements for a number of reasons including a need for more space, an updated look or an increase in your homes value. The right home improvements can address all these needs, while the worst home improvements will simply consume time and money.

The Worst Home Improvements For Your Dollar

Check with the home office. Although more and more people are working from home, most homebuyers are looking for the most versatile space they can find. Special purpose rooms like a home office make the worst home improvements because you may realize very little return on your investment if your buyer isn’t interested in this type of feature. Exception: turning an area of wasted space into a home office (like a closet or nook) can have the impact of adding a room, and be a smart investment.

A sunny spot. While a sunroom may take advantage of a bright spot on your property, many perspective buyers see it as a place they’ll seldom use that may require extra cleaning and heating costs. On average, a sunroom addition returns roughly half of its cost when it comes time to sell your home. (more…)

Kitchen Countertops – The Best Choice for Resale Value

Thursday, October 27th, 2011

From concrete to stainless steel to quartz and laminate in every color under the sun, there are so many choices for kitchen countertops that making a selection can be overwhelming. There are a multitude of factors that play into this choice, including aesthetics, durability, price and ultimately, which kitchen countertops are the best option for resale value. If you’re considering replacing kitchen countertops, read on. We’ve outlined the various materials on the market along with their prices, characteristics and our top picks for resale.

Material: Granite

Cost: $80+ per s.f.

Pros: Heat resistant, durable, wide variety of colors and finishes, the top choice for buyers.

Cons: Price, can stain, chip or crack.

Material: Soapstone

soapstone is a durable option for kitchen countertops and good for resale valueCost: $60+ per s.f. (more…)

Hire a Contractor or Do-It-Yourself?

Thursday, October 27th, 2011

Quick question: how many fingers do you have?

Go ahead. Take a look. We’ll wait.

……….

………

Okay, so if you answered any number less than ten, AND if the reason for that number is directly related to an incident involving power tools, YOU should always hire a contractor. Knocking down a wall? Hire a contractor. Laying tile? Hire a contractor. Changing a roll of toilet paper? HIRE A CONTRACTOR! (more…)