Combining apartments: Need another bedroom or two? How about the ones next door?

As you may have heard (over and over again), there are very, very few apartments for sale in Manhattan.  

Need a bigger apartment?  Too bad.  There aren't any.  So more and more, people are buying the apartment next door and combining it with the one they already have. 

Some may even buy the apartment beyond the one next door as well, or the one on the other side of theirs, or upstairs, or downstairs.  I’ve seen combinations of as many as four units.

This can be a satisfactory arrangement for all concerned.

The people next door may be motivated to sell by the prospect of getting a higher-than-market price for theirs, as they hold all the negotiating chips.  

The buyers pay a premium, but they get the additional space with considerably less hassle than they’d have if they sold their current apartment and bought another larger one, assuming they could even find another larger one.

Plus, there's synergy in a combination.  

Jonathan Miller's Combinations: Creating a Larger Manhattan Co-op or Condo says that the more square feet involved, the higher the price per square foot, or in Miller’s words, “1 + 1 = 2.5.”   So the combination is worth more than its components would be worth separately.

Miller is president of Miller Samuel Inc. Real Estate Appraisers and Consultants, and the universally acknowledged best source of information on  Manhattan real estate.

The value of the smaller apartment in a combination is increased even more if it’s in the back of the building, gets less light, or has other disadvantages.  

Now it’s part of a nice big apartment in the front of the building with plenty of light.  If it’s turned into, say, a master suite, the lack of light may become an advantage. 

Some combinations work more gracefully than others.  Here’s what to watch out for:

If you’re thinking about converting one of the kitchens to a bathroom, check with a plumber well in advance to make sure the waste line in the kitchen will accommodate a toilet. 

If a bathroom is to become a laundry room, remember you’ll have to either vent the dryer or get a dryer that does not require venting.

If you want to move or add plumbing, especially if you’re thinking about converting a closet to a powder room or laundry room, be aware that most buildings do not allow wet rooms over dry rooms.  

The room directly below the closet you’re thinking of converting is also a closet.  Leaks happen.  Nobody likes leaks, especially leaks into closets.  Closets are where people keep things they particularly don’t want to get wet. 

Be aware that your maintenance may be disproportionately high.  As of course you know, maintenance in a co-op (I’m dealing mostly with co-ops as they comprise the lion’s share of ownable residential real estate in New York) is based on the number of shares attached to the apartment in a co-op.  

From the many offering plans I’ve looked at, it appears that an apartment gets a certain base number of shares just for existing as a discrete unit.  Then more shares are added for higher floors, balconies, fireplaces, etc.   

After you combine, you have the base number of shares for two or more apartments instead of just one.  

Thus your new three bedroom apartment may have significantly more shares—and thus significantly higher maintenance—than a three bedroom in the same building that’s not a combination.  

Of course you will play with the floor plans, which should be in your co-op or condo’s offering plan. 

If you’re combining two or, especially, more than two one-bedroom apartments, you may have to do significant reconfiguring in order to have a living room that’s big enough to be in proportion to the size of the new space. 

Make sure the new living room will be facing the street, not a brick wall or an airshaft (a courtyard in real estate language).  

Check for lot line windows in the new apartment (these are windows that legally don’t exist, as they will be lost if another building goes up next door).  

Note that thick black lines in floor plans indicate walls that can’t be removed—either they’re holding up the building or they house plumbing risers or something else too important or difficult to change.

The fewer obvious seams between the apartments, the better.  The combinations that work best, and are most valuable for resale, are those where you can’t tell where the division was originally.  

Be aware that an architect may have better ideas for arranging the space than you will, but be absolutely sure you hire an architect who has combined apartments in the past and is familiar with co-ops.

There are also legal issues to be addressed, such as what to do about the stock certificates, and what impact the combination will have on the building's certificate of occupancy.  

Miller suggests keeping the stock certificates separate, to give the owners and the co-op more flexibility.  

But if you keep them separate,  you may have to re-separate the two apartments, restore a kitchen, put up a wall or two, or whatever, when you ultimately sell.  

Talk about what to do with the stock certificates with your lawyer and of course your co-op board and or managing agent.  

If possible, talk to someone in your building who has already done a combination.

By the way, even if you’ve owned your apartment for many years, you will need co-op board approval to buy a second one in the building.  You will most likely have to go through the same process you did the first time.  For a condo, you will still probably have to get a waiver of the right of first refusal.

Any questions?  E-mail cstimpson@stribling.com or call 917-991-9549.  I'll either answer them or know where to get the answers.