If you’re in the market for a larger apartment, but you love your building and don’t want to move, buy the unit next door and combine the two.
That’s what Praneet Gill, chief strategy officer at a tech startup, and her husband did. The couple lived in a third-floor apartment with their two children in a pre-war building they loved on Manhattan’s Upper West Side. When two adjoining units became available on the sixth floor, they purchased both, paying just under $3.3 million for a one-bedroom, one-bath apartment and a “classic six,” consisting of a living room, dining room, kitchen, two full bedrooms and a maid’s room with its own bath.
After a two-year, $2 million renovation completed just before the pandemic, Ms. Gill, 41, had created a five-bedroom, five-bath apartment with a spacious, open kitchen and central air conditioning.
“We wanted the apartment to be our own and to reflect what we like,” she said. “We kept it in the pre-war style of the building, so we maintained its spirit, but everything is modern and new.”
Combining apartments is a complicated process. Ms. Gill, for example, required approval from three different entities: her co-op board, the New York City Department of Buildings and, since the building is in a historic district, from the municipal Landmarks Preservation Commission.
Those hoping to purchase multiple apartments and combine them in a building in which they don’t currently reside may find it tough going, according to Margery N. Weinstein, a real-estate attorney with Ganfer Shore Leeds & Zauderer in New York City.
“Boards are quite reluctant to even review, much less approve, a proposed combination in advance of approving the purchaser and having the purchaser close on the units,” she said. “You are taking a risk that the board concludes it won’t allow the structural changes.”
But a current apartment owner planning to purchase an adjacent unit and combine them might find the process a bit easier. “You’re already in the building and know people on the board,” Ms. Weinstein said. “You can pass along an informal architectural sketch to get a general idea that the combination is structurally sound and may be acceptable to the board before you purchase the apartment.”
Either way, hiring experts who have experience in combining units is key. At a minimum, you’ll need an architect, designer and attorney to get you through the bureaucratic process.
Co-ops aren’t the only type of multifamily units that can be combined—condominiums can be joined as well, whether new construction or existing units. Dan Teixeira, director of sales at the Four Seasons Hotel & Private Residences Fort Lauderdale, a 22-story project slated for completion by the end of this year, recently worked with a buyer who is paying over $10 million to purchase a 3,090-square-foot, three-bedroom duplex to combine with an adjacent 2,000-square-foot condominium. The result will be a unique floor plan for the building: an oceanfront residence with five bedrooms and six baths. The buyer plans to close on each unit individually and then combine them, but Mr. Teixeira said those who purchase very early in the development process might be able to have a developer combine the units pre-construction by amending building plans and securing new permits.
Here are some things to keep in mind if you’re considering combining co-op apartments or condominium units.
Prepare yourself for red tape. If you don’t already own a unit in the building, you will have to go into contract with two different sellers and coordinate the closings. Board approval is required—that can be difficult—and you’ll need an experienced architect at the outset to advise you whether your vision is even feasible. Then there is the disruption of a gut renovation. Ms. Gill’s project took two years, and her family lived in the units toward the end of the construction process, at which point she had no fully functioning bathroom, no kitchen and prepared meals for her 4- and 6-year-old children in an Instant Pot.
Figure out the finances. Melissa Cohn, executive mortgage banker at William Raveis Mortgage in New York, said that financing the combination of two or more apartments is generally done in one of two ways. If you already own a unit and have sufficient equity, you can do a cash-out refinance on your current unit to cover the cost of the second apartment. Alternatively, a lender may finance the two units together, either adding the value of both units as is or considering the future value of the combined units and financing a percentage of that number. Either way, expect the bank to hold an escrow for the cost of removing the second kitchen (removal is required by law, with a few exceptions). The escrow, which varies but is generally no less than $10,000, is refunded once the work is completed, Ms. Cohn said.
Consider that it may be a bad idea. Co-op boards may deny a combination if the structural integrity of the building is affected, the renovations will be disruptive to other residents or if your design calls for a configuration called “wet over dry,” such as a kitchen or bath over a bedroom below. This is particularly true with proposed renovations that penetrate the existing concrete slab between units to create a duplex. “You might envision the apartment in a way that just can’t be done because of the building structure,” said Ms. Weinstein, the attorney. But a successful combination involves more than just structural integrity. It needs to make sense from a design standpoint as well. Rudy Duemichen, the 64-year-old chief executive officer of an international distribution company, has already been through the successful combination of two-bedroom and studio apartments on the Upper East Side of Manhattan. He now owns a two-bedroom unit on Fifth Avenue in Greenwich Village that he hopes to combine with an adjoining one-bedroom.
“I have an apartment that’s an L-shape and faces the back, with just one window on Fifth Avenue, and here comes this apartment right next to me that completes a square,” he said. “You don’t buy every apartment next to you, but this one has incredible value added because all the windows are on Fifth Avenue so it overcomes the negatives I have with my apartment. You don’t want to end up with a funky shape or weird flow, but if you end up with a square, it’s great.”