While waiting for the decision to the Letter of No Objection, we decided to get to work on the rental apartment since we are not doing any work on it that requires us to wait for building permits.  Also, we may need to cram into this one bedroom unit for a while because we will most likely sell our current apartment before the renovations have completed.

I have to admit when we first looked at the house, I saw this apartment as requiring only minimal work:  tearing out the linoleum and refinishing floors along with some paint and plaster work.  At second glance—the place is a dump.  Not really, but it is really showing its age in some places and you can tell a little old lady resided there once (flowered wallpaper and gingham curtains).

Our visions of removing the linoleum to find a pristine hardwood floor that had been protected over the years by the layers of vinyl were quickly dashed.  We started with the bedroom first.  Layers one and two came off pretty easily, the third lay  er (a wood imitation pattern) was a little more difficult because it had some sort of paper layer glued to it.  Eventually it all came off.  My favorite layer was the imitation shag carpet pattern with yellow and red squares.

Next, we tackled the dining area.  In here there were not three, but five layers of linoleum!  After the first layer, which we were able to cut and roll up, the subsequent layers were much trickier.

Eventually we got to the bottom layer only to discover that the person who installed it decided to make sure it would never come up putting a nail every six inches.  These were a lot of fun to get out.  The only interesting part in the process were the baseball cards we found from the 50’s between layer one and two.  Sadly, they were not well preserved—we could have used a Mickey Mantle in perfect condition to fund some marble counter tops.  The floors underneath are basically pine sub-flooring (no intricate woodwork here).  It looks like they were painted over as some point so they will need to be stripped (?) sanded and stained.  There are some areas where it looks like there was some water damage.  We will need to remove all the baseboards to complete this work.  They are not in great shape so we don’t mind but we will install new ones in the exact same style if we can.

Next on the agenda was dealing with the drop ceilings.  We have friends who removed a drop ceiling to reveal twelve foot ceilings with original molding.  We, however, had no illusions going in because a few of the acoustical panels had stains on them so we were pretty sure that the drop ceilings were added, not to reduce heating bills as was often done, but to cover up peeling plaster and water damage.   And… we were correct.  

The small room off the bedroom and the dining area both had acoustical paneling that was easy to remove.  As we suspected, lots of water stains and what looks like wood panels that were probably put up to stop the falling plaster due to past water damage. We know that no leaks are present because we have been to the house after heavy rains and saw no water leaking or wet spots.  It looks like we will have to remove these ceiling completely and put in dry wall.  The bedroom ceiling is in good shape except for some peeling paint.  The molding in there is nice so we will save that ceiling by skim coating the surface.

When we were first reviewing the finances for our house, we were struck by the low property taxes that the current owner was paying. We knew we wouldn’t get as good of a deal but didn’t know how to estimate them. Calculating New York City property taxes had always been a mystery to me. For the purposes of estimating our future expenses we simply rounded up to the nearest hundred and doubled her payment. Unfortunately, this strategy was flawed and our property taxes are more than we thought. On the bright side, with the help of our attorney, we learned a quick way to estimate them and it is much easier than we expected.

Basically, there are just 3 steps.

Step 1: Look up the assessed value of the property according the tax department records. You can easily look this up on the website www.propertyshark.com for free.

Step 2: If your income is less than $500,000 you qualify for the Basic STAR property tax exemption. To apply this exemption you subtract $1,670 from the assessed value found in Step 1. The amount of this exemption changes from year to year so verify the current STAR exemption rates with NY state’s website.

Step 3: Multiply the discounted assessed value by 18% and you have a good estimate of your tax bill. This rate applies to most residential properties such as homes and condominiums. The rate changes sometimes and you should verify it with the City’s website.

Here’s an example: Assuming the new home you’re looking at has an assessed value of $20,000 (assessed value has nothing to do with market value–so don’t freak out) and you qualify for Basic STAR. Your annual tax bill will be $3,299.40 that’s calculated by (20,000 – 1,670) x 0.18.

When you get your mortgage the bank should work with the title company to calculate your true tax bill for the next year (we learned the hard way). I believe they adjust the assessed value of the home in the process but it shouldn’t move by much and this formula should be accurate within a few hundred dollars.

There are a number of other exemptions you may qualify for if you are a senior citizen, veteran or disabled. If any of these apply I recommend researching this further on the NYC government website.

We finally closed on the house this week! That deserved an exclamation point. It seems like we have been talking about the house, writing about the house and spending lots of money on the house (architect, structural engineer, expeditor) without having actually owned the house. Now we proudly own a small percentage and the bank owns the rest.

The closing went smoothly up until the time that the bank realized it had our property taxes listed wrong (for the second time) and we had to wait over three hours for them to correct it.

Tip: don’t assume that the bank documents are all correct—check all the figures before you get to the closing. There is only so much small talk you can make during a 5 hour closing.

We had only one negotiation during the closing. The house was advertised as a legal two-family home but because it was built in 1899, long before the Department of Building Codes were around to torture homeowners, there was no Certificate of Occupancy.  The house was listed as a one-family when it was built. When the seller’s family moved in in the 50’s they immediately started using it as a two-family (two separate families from the same extended family). Since we want to add an extension, we were told we need a C of O (to apply for one is costly and time consuming) but we also found out that we could get something called a Letter of No Objection from the City that basically says that it has no objection to it staying a two-family. The sellers submitted an application but it had not come in at the time of closing. Our lawyer negotiated a certain amount of money to be put into escrow (rather than delay the closing) in case the application was denied and we needed to file for a C of O ourselves. The seller agreed and we just negotiated on the amount.

Tip to buyers: find out whether your prospective house has a C or O or at least a Letter of No Objection well before you close (or at contract time ask the seller to provide one at closing). If you are thinking of purchasing a fixer-upper find out the codes in your city and what you will need to start renovating so that you will be armed with knowledge when you negotiate for that diamond in the rough because we all know, when it comes to renovations, time is money.

Luckily in our case, the sellers were very nice and we learned a lot of details about the house because they grew up in the house. One interesting tidbit was that there is a small stain glass window that is in the wall of the third floor apartment. Apparently, it was in the hallway leading to the living room and was intended to let light in from the skylight. It is now covered by a sheet of drywall or wood. We will post a picture when we uncover it. They also told us how much fun they had as kids in the backyard. Their dad used to turn the backyard into a skating rink in the winter. It was nice to hear that it was a happy family home for all those years.