5 Hidden Renovation Costs
Apartment renovations are exciting projects that will transform your living space into your home. Unfortunately, it is not as fun as buying your apartment. Anyone who has been involved in a renovation will tell you, the path can be bumpy and expensive. Co-op and condo buildings in New York have unique challenges, these stem from the alteration agreement, anything from stringent board approvals to specific building requirements. These types of challenges are commonplace, but they can add thousands of dollars to your budget, even much much more if not managed properly. Here, we explore five hidden costs that could balloon your budget.
1. Electrical Upgrades
One often overlooked cost in apartment renovations involves electrical upgrades. With many homeowners opting for modern, energy-efficient appliances, combined with the cities hard-on for gas. There is a growing trend to go all electric, which includes installing induction cooktops, high-efficiency HVAC systems, or electric dryers. While these upgrades are excellent for reducing carbon footprints and enhancing efficiency, it may cost you. Many of the buildings in the city don’t have the electrical infrastructure for the loads that modern appliances require.
If your electrical panel lacks capacity, you’ll need to upgrade it. A process that could range from low thousands to tens of thousands of dollars depending on the location and complexity. In older buildings, the entire electrical riser (the line that energizes the apartment from the basement) might need upgrading, which can be a significant expense, depending on what is needed. In many pre-war buildings, increasing your unit’s power requirements may necessitate upgrading the building’s overall electrical service.
This is where you will have to get Con Edison involved. If your unit requires more power than the existing service can provide or allocated to your unit, Con Edison will need to bring additional service into the building from the street. This process involves requesting and coordinating the increased service, permits, and extensive coordination. The cost? This typically won’t cost less than $50,000 and could be close to $100,000 or more, depending on your team and complexity of the project. Some buildings cover this cost, while others pass it on to the homeowner fully or partially, so be sure to clarify this during your renovation planning.
Insider Tip: Before committing to an all-electric renovation, consult an electrician and confirm your building’s capacity. Check with the board and management to understand their policies on shared infrastructure upgrades.
2. Navigating Bureaucracy
Renovations in co-op and condo buildings have strict rules, and ignoring them can lead to stop work orders & hefty fines. Most buildings require alteration agreements that detail the scope of work, timelines, approvals, and contractor requirements. Beyond the building’s internal rules, you’ll also need to navigate city permits, especially for anything more than a cosmetic spif, and can get particularly challenging if the renovation has structural changes, electrical upgrades, or combining units.
In the City, for example, permits are required for work as simple as moving a wall or upgrading your HVAC system. Filing fees, architect or engineer sign-offs, and additional inspections can add tens of thousand dollars to your budget, if not more. If you’re working in a landmarked building, expect more hurdles, as preservation rules can dictate the look, materials, and even methods.
Insider Tip: Hire the right team and always budget for permits, administrative fees, and potential delays. Partnering with an experienced contractor or architect familiar with will save you time and money, but expect to pay in 8-12% soft costs to complete your project.
3. Building House Rules
All condo and co-ops that I know of have rules governing renovations, and complying with these is mandatory and come at a cost. Common requirements include:
- Licensed and Insured Contractors: Liability has gotten to be the top issue with buildings as of late, and the building’s broker or management company ask for strict limits and very specific language in the policy. In many cases, the full policy including all exclusions will be required in advance of contractor approval.
- Noise and Work Hour Restrictions: All buildings restrict construction hours and sometimes timeframes, which can prolong the project and increase costs. In terms of timeframes, there are some buildings, usually ultra exclusive, that only allow construction activities in the summer months, which can really extend a project.
- Deposits and Fees: Alteration agreements often require refundable security deposits and non-refundable processing fees. These can range from $500 to $5,000 or more, depending on the building. These fees don’t include reviewing consultant fees and fees for restoring the service hallway & elevator.
- Window Replacements: Some buildings require original or aged windows to be replaced. This is something that should be checked during the buying process, but will likely not come onto your radar until your professional reads the house rules and alteration agreement.
Insider Tip: Pay for a consultation with the buildings’ reviewing consultant to go over your building’s alteration agreement. This can help you avoid surprise fees and delays.
4. Unexpected Structural Issues
In pre-war buildings, it’s not uncommon to find electrical issues, corroded pipes, or problems with the structural framing. Be familiar with who is responsible for which components; in all buildings I work in, the building is required to address infrastructure-related issues.
For example, discovering a lintel issue when the window is being replaced, would be a building expense. Similarly, corroded risers or branch plumbing may need replacing and will need to meet the current code requirements, in this case typically the building pays for riser work and homeowner the branch lines.
Insider Tip: Always build in a contingency fund, I suggest 20-30%, this can save you time and stress. Also, you could ask the reviewing consultant if there are any common issues in the building, if you opt for a consultation.
5. Charting Conflict
Once work begins, there will likely be design changes, layout adjustments, or even specification oversights. While change orders are unavoidable, making sure you are covered for your original scope is key. For example, if a material specification was missed or if additional detailing is required, a contractor might want a change order, which can create shutdowns and arguments.
Hiring a seasoned consultant & attorney with strong knowledge of contractual language is key in reducing these issues. Properly drafted specs & contracts that clearly defines the scope of work, along with the process for approving changes, and provisions for oversights.
Insider Tip: Hire the right team. Also, have all of the bidding phase documented as well as a comprehensive bid review process with all parties before signing a contract.
Plan Ahead
The key to managing hidden renovation costs is thorough preparation combined clear & consistent communication. Here are a few steps to keep your project on track:
- Consult Experts Early: Engage architects, engineers, and contractors who understand the intricacies of condo and co-op renovations.
- Clarify Building Rules: Work with a consultant, possibly the building reviewing architect, to understand the rules, fees, and responsibilities. Check with the board and management for a preferred vendor list.
- Budget Reality: Factor in a contingency for hidden conditions, permitting costs, and upgrades you and your family decide to add during construction.
- Communicate Clearly: Communicate with all stakeholders, everybody from contractors to neighbors, about your plans, noise, and delays.
- Know the History: Check with your building to see if they use an alteration management software like https://inbuiltsolution.com/. This can give you insights on both your apartment and common building renovations issues. This tool can also help you manage & monitor the renovation process.
Conclusion
Renovating can create a lovely home for you and your family, but it’s not without its challenges. By planning ahead you can minimize financial surprises and unnecessary stress. If this is your first home and renovation, keep in mind this process is the introduction to coop and condo living.