Townhouse Due Diligence
Here are four tips we offer to clients who are researching a prospective townhouse purchase in New York City:
1) Review the setup in the listing agent’s marketing materials. This is a detailed breakdown of current expenses for the house – oil, fuel, water/sewer rents, electricity, property taxes, etc. – as well as an income breakdown if the house includes rental units – with current rent, lease type (regulated or free market), expiry, apartment size, etc. From an investment perspective, this may help confirm the townhouse is worth what the seller is asking for it.
2) Hire an architect to investigate floor-plans for an old house, dated layout, or both. Pre-war houses often have dated kitchen setups, underutilized space in the center of floors that can be leveraged for walk-in closets and expanded baths, and unfinished basements that can be used for expanded mechanicals, gyms, saunas, laundry rooms, etc. Reviewing floor-plans will help envision a townhouse’s potential, and give a buyer’s designer a starting-point.
3) Know how much oil/gas you will have available in your heating unit (if applicable), and its value. Tens-of-thousands of dollars in fuel can be left in tanks at closing, and this is a common point of negotiation for single and multi-family townhouses in NYC. By being able to communicate the value of fuel in the purchase, one can negotiate quicker, smarter and with the message that one understands what may be of value or expense in the future.
4) Before signing a purchase agreement, hire your own inspector and surveyor. The last thing a buyer wants is to have their deal derailed when it is too late, due to an overloaded electrical sub-panel, a leaky roof or a disputed boundary. The return on investment is worth it.