A Guide to Purchasing and Renovating a Townhouse

Townhouse renovation basics, from surveying site conditions and financing options to bringing in the pros at the right time

townhouse renovation
Janet and Jerry’s brownstone renovation

You’ve decided to buy and embark on a townhouse renovation. And not just that—you want one you can customize for your family. It’s both an exciting and ambitious undertaking, so read on for the 101 on what to look for when purchasing, how to obtain financing, and how to find the right team to tackle the project, including some advice from renovation matchmaker, Sweeten.

Finding the right house

If you’re looking for a townhouse to renovate, you probably already have an idea of the kind of home you are looking to create. You may have tired of neighbors stomping above you or a cumbersome co-op board, or perhaps you are drawn to the dream of owning your very own roof terrace and backyard. You might have grand plans for a wine cellar or a room to dedicate to a home theater. Maybe you’d also like rental income to offset the cost of home ownership, or you’re an investor looking to maximize rental income. Whatever your motivations, your townhouse renovation search should be narrowed to the properties that will allow you to create the lifestyle you’re looking for. We talked to Chris Halliburton, Associate Broker of Investment Sales at Compass, about the key questions to ask during your search.

What’s the history of the building?

This is where you gather information about the soundness of the property. New York City’s Department of Buildings (DOB) has a great site where you can look up the history of the property and see the violations, complaints, as well as applications and permits for prior work done to the property. Look for red flags, and use the information to determine whether prior work—especially structural changes or alterations to the plumbing, electrical, and mechanicals—has been executed properly. Property Shark is another place where you can access comprehensive, publicly available information about the property in question.

What’s the actual square footage versus the buildable square footage?

Many townhouses are on lots much larger than the current building footprint. For example, brownstones are often on 100-foot lots, but the building itself may only be 20’ x 35’. Chris explains that these properties can often be built back with extensions ranging from ten to 30 feet long, depending on the floor area ratio (FAR). The FAR is determined by the zoning designation, and in New York City, the Zoning Resolution designates ten residential districts. For example, a lot that is 20’ x 100’ in an R7-2 zone that has a FAR of 3.44 allows you to put up a 6,880-square-foot building.

You may also be able to expand vertically—this is almost always a given, says Chris, although you may be constrained by landmark preservation requirements (see below). Similarly, you should explore excavation possibilities for creating a cellar. While below-grade space is not counted in the square footage, it is often useful to add space below for mechanicals or storage, even if it is not livable. By storing these elements underground, you can free up space above grade to maximize your living space and/or rental income potential.

townhouse renovation
Marsha and Adam’s townhouse renovation

What are the existing conditions?

In addition to the information that you gather via city databases, pay attention to the existing conditions of the building. Are there signs of water damage, mold, or termites? Also be aware of outside forces beyond an owner’s control—is there a lot of ongoing or planned construction in the area? If there is an empty lot next door, find out what is happening there. Chris points out that the construction of tunnels for the Second Avenue subway was a major issue for surrounding properties, not only in terms of noise and inconvenience but also with structural damage related to shifting foundations.

Is the property landmarked in a historic district?

The Landmark Preservation Commission is New York City’s governing agency for preserving buildings and sites that are culturally, historically, and architecturally significant. Many brownstone townhouses happen to be in designated historic districts—there are a total of more than 36,000 landmark properties in 141 historic districts and extensions throughout the five boroughs, according to the LPC’s website. If the townhouse you’re considering is protected, you will need to submit any planned changes to the LPC for review at the same time that you submit plans to the DOB. Chris explains, “Anything that the LPC approves will be approved 99 percent of the time by the DOB. But it’s not the case vice versa.” In particular, any changes to the façade will be scrutinized by the LPC. For example, while a back extension will not affect the view of the building from the street, adding floors will. If you want to add to the top of the building, you may be required to start 20 feet back from the front of the building, so that the additional floor can’t be seen from the street.

An LPC review will add extra time to your townhouse renovation, so this should be a consideration, especially if you are looking to bring in rental income on a deadline.

Financing your townhouse renovation

Obtaining financing for a townhouse purchase and renovation is essentially the same process as a condo purchase and renovation (co-ops are the outlier here). This is because a townhouse, like a condo, is real property. You can consult this Sweeten guide on financing home renovations. If you are financing both the purchase of the property as well as the renovation, you have a few options:

Apply for a construction loan and a permanent mortgage separately. This means you will need to research two separate loans and pay for two sets of closing costs. Some lenders only provide construction loans, while others will only make combination loans. Construction loans typically run for 12 months or under and are subject to an adjustable interest rate that resets quarterly or sometimes monthly.

townhouse renovation
Nazli and Larry’s brownstone renovation

Alternatively, you can apply for a construction-to-permanent loan. This combination instrument simplifies the process because you only need to take out one loan and pay closing costs once. It’s the more popular option for this reason. While construction is ongoing, you only pay interest on the outstanding balance, and then it is converted to a mortgage after the renovation is complete. You may, however, pay more for the permanent mortgage because the need for a combination has reduced your lender options.

As with so many aspects of home renovation, the way to assess what is best for your situation is to consult a pro—in this case, a mortgage banker.

Lining up an all-star team

When searching for a townhouse to renovate, it’s important to gather the experts who will not only help you get the job done right but who can help you assess whether it’s a project worth tackling in the first place. For this reason, you’ll need to line up several professionals early on, including structural engineers, electricians, and plumbers. Chris Halliburton suggests that you bring these pros in for site visits prior to signing the contract so that you don’t “end up buying a money pit.” He estimates that you could have all these consultations done for roughly $1,500 to $2,000. When it comes to general contractors, Sweeten’s own founder, CEO—and trained architect—understands firsthand the importance of having a professional you can trust. “When I started to renovate my own Brooklyn brownstone, I ended up hiring the wrong general contractor,” she says. “If I can make a wrong choice, anyone can.” She started Sweeten to help homeowners find licensed and vetted contractors and to ultimately renovate fearlessly to create a home they love.

Many thanks to Chris Halliburton of Compass for his insights!

Jean, founder and CEO of Sweeten, tells us what to know before renovating a brownstone in the first installment of her renovation Q&A series.

Sweeten handpicks the best general contractors to match each project’s location, budget, and scope, helping until project completion. Follow the blog for renovation ideas and inspiration and when you’re ready to renovate, start your renovation on Sweeten.