My husband and I rent a converted carriage house in the backyard of a four-story, 16-unit building. To get to our place, you have to walk through the building’s main hallway, but it’s otherwise completely detached. We’ve been dreaming of buying the house from our landlord, but is this even possible? How would we go about doing it? What real estate professionals should we consult?
The good news? It’s possible. The bad news? It’s not going to be cheap or easy, our experts say.
“This will be a long, difficult, and expensive process with no guarantee for success — plus, the city will not make it easy for you,” says Arik Lifshitz, president of DSA Management, which owns 40 apartment buildings in New York?. “But if you have the funds, patience and the time, I am pretty confident you can legally buy your home.”
The first challenge will be convincing your landlord to let it go, which may be a hard sell because separating the carriage house from the rest of the parcel could easily bring down the value of the apartment building.
“In most instances, the whole is more valuable than the sum of its parts,” explains Lifshitz. “For example, if the property were ever to be repositioned or redeveloped, this sale would be a hindrance.”
That’s because it would be extremely difficult, if not impossible, for a buyer to develop the lot without acquiring both properties, he says. “Even an interior renovation will be more costly as any work done on the front property will have to make accommodations for the back property,” he adds.
The upshot? A buyer won’t be willing to pay as much, your landlord will get less money in a sale, and you’ll have to pay more to your landlord to compensate for this loss of future income.
Additionally, you’d also have to separate the tax lots, which requires approvals from the city Department of Finance and the Department of Buildings. (More info on the process is available here.)
Plus, you’d have to meet a spate of building code and zoning requirements, which would be costly (fees for architects, attorneys and expeditors to get the plan drafted and approved) and may involve physical changes to both buildings, Lifshitz says.
“[The properties] would likely still sit on one zoning lot, as they would need to share the required light and air and of course the egress to exit,” says James Nelson, a partner at commercial brokerage Massey Knakal, who is marketing a small apartment building in the West Village that includes an attached carriage house.
Next, you’d need to get an “easement” from your landlord, or an agreement that would ensure you could access the house through the apartment building in perpetuity, says Lifshitz. This would be another hurdle to getting your landlord’s agreement, since it would be an issue if they ever wanted to sell the building. Indeed, Nelson’s West Village seller considered breaking up that property, he says, but decided against it because “most buyers wanted to control both the front and back properties.”
Alternatively, separating the entrances is a possible solution, but not without its own complications, like a potentially complex and expensive renovation.
As for professionals, you’ll want to consult a land use attorney, an expediter and an architect. “A broker could also certainly help provide a sense of what it would be worth,” says Nelson.
Considering all of the above, it might actually be a better investment (of time and money) to buy the entire property, rental apartments and all, if you’re up for becoming a landlord yourself.
“Ask the landlord for a copy of the rent roll [the list of tenants and what they pay each month] and projected annual expenses,” advises Lifshitz. “Bring that information to a mortgage broker and see what kind of loan you may qualify for. It may be cheaper, as you will also be earning rents on the other 16 units, which offset the added price, and it will certainly be quicker and easier to buy the entire property.”
Leigh Kamping-Carder is a senior editor at BrickUnderground.com, the online survival guide to finding a NYC apartment and living happily ever after. To see more expert answers or to ask a real estate question, click here.
