If I were to spend some time lounging on a psychiatrist’s Eames Chair, my analyst might conclude that the kids and I have binge-read too much Roald Dahl and Dr. Seuss, and certainly, that I have been an architect for far too long. Many nights in the deepest of sleep, I wander through a home entirely of my own imagination, invariably vacant and in spectacular disrepair. As I explore, I discover secret passages leading to ever larger, more fantastic, and more desperate spaces. Eventually in these dreams, I begin imagining the Sisyphean tasks of restoration and renovation. Even in my dreams, there just isn’t enough capital for either the purchase or for renovations.
Whether building a ground-up home or renovating a studio apartment, most projects are aspirational and capital intensive. Building upon the lessons learned in my dreams, I often invent an imaginary rich uncle, one who has been kind enough to bequeath to me a property as well as the funds with which to build. How would I prioritize needs and wants if I had a fixed amount of money, and no access to more? Failing to recognize the paramount nature of budgetary constraints would be unacceptably akin to staring at the teeth of my imaginary gift horse.
I believe my dreams also stem from having lived and practiced in New York City for so many years. New York City is a mirage. A majority of people come from elsewhere, work hard, and (mostly) succeed. At some point, they announce their success by setting out to purchase an apartment, penthouse, or townhouse. Unlike my dreams, I’ve rarely toured a home with a potential buyer that was not one room too small or too inexpensive. To make matters worse, construction costs and logistic challenges make it nearly impossible to budget adequately for necessary or desired renovations. To maintain budget as a priority, homeowners will sometimes share a rich uncle story of limited resources, and more frequently, will seek to elevate financial considerations due to market circumstances and value assessment. We often hear the lament that clients have bought at the top of the market, thereby making an over-investment in renovations imprudent.
In helping a client budget for construction, whether for a new house or a modest apartment renovation, we work to establish an equilibrium between wants and needs, and to balance head and heart. Setting a budget for a new home is fairly straightforward; determine the size and the general quality, and then compare with completed projects. Budgeting for renovations in Manhattan can be trickier, as necessary and discretionary criteria can seem more arbitrary and difficult to balance. While introductory conversations are usually based upon a client’s clear and predetermined vison, most initial thoughts and expectations about scope and budget are dramatically underestimated. The discipline that comes from establishing a limited budget by using the imaginary rich uncle approach can be very elusive. To adapt a phrase, “if I had a dollar for every gut renovation that has been presented by as a cosmetic project, I’d be a wealthy architect.” When evaluating the balance between discretionary and necessary, we often utilize a simplistic and disarming algorithm we call “A, B, or C.”
An “A” project type is one in which the scope can be contained and is unlikely to expand. This may be a stand-alone kitchen or bath renovation whose scope will not extend to installing central air, room reconfigurations, and a complete re-wiring and repainting of the entire residence. We refer to these “A” projects as surgical interventions.
A “B” project is described by having many acceptable or even well-liked components, but where the intended scope touches many areas. These “B” projects represent the majority of projects to which we are introduced. Usually, the buyer repeatedly asserts and assures that the project is “not a gut,” and that the intended scope is minimal, really a cosmetic project. Ninety percent of the time, these “B” projects evolve to become full-scope undertakings. Real estate sales people consistently and predictably reinforce scope underestimation by presenting favorable brokerage materials. Properties, even ones in estate conditions, are shown in their best light and are easier to sell if represented this way. Purchasers are willing partners in this deception, usually confident of the acceptability of certain shortcomings of a particular property, or believing work could be performed down the road. While realtors have the experience to dig deeper, they lack the incentive, and buyers who don’t have the means, time, or desire to fully renovate complicitly cooperate.
Earlier in our career, we were more willing to accommodate partial scope expectations, even when we were skeptical. When consulting with homeowners, we help assess scope and establish accurate project budgets. First, we start with what is behind the walls, not just the cosmetic details. Would it make sense, for instance, to skim coat and paint an entire apartment without checking the wiring in the walls? We have also found many renovated apartments with floors that were not replaced when previous renovations were performed. It’s very difficult to replace a floor after the fact. Similarly, most buildings in Manhattan do not allow for the replacement of bathroom fixtures and re-tiling without replacing the branch piping behind the walls and replacing the shower valves with code compliant anti-scald valves. As a project’s scope increases to include wiring and plumbing work, costs increase, and not electively so. At which point, categories like air-conditioning tip the scales. Installing proper air conditioning with all of the associated costs still presents a meaningful return on investment, both from a lifestyle and monetary viewpoint. As an investment, we have found our clients have enjoyed the greater appreciation in value after performing full renovations as opposed to partial or cosmetic renovations. Few new buyers want to pay for a previous homeowner’s personal decoration, but almost all buyers are interested in buying a home that has had its electric upgraded, its bathrooms renovated, its kitchen redone and has central air – provided of course the work is technically and aesthetically well executed.
In addition to evaluating the systemic needs of a project, we also review the discretionary choices, many of which often tip the scales towards full renovations. An example I frequently use is ‘doors and hardware.’ Often a number of new door openings are necessitated by layout changes, and a number of doors are scheduled to remain. Should the new doors, hardware and trim be fabricated and installed to match the existing, or will the owner prefer to replace all the doors, hardware, and trim to a new (improved) standard? It’s very hard to endorse making new installations match substandard existing conditions. Even the best items of a previous renovation usually look dated or tired when placed next to new work.
At the end of the conversation, our clients have learned that their original – and certain – plan of a “B” might be ill considered, and that they would be wise to either limit the scope of the project and proceed with an “A” project or embrace scope-creep. To finish the alphabetical allegory, a “C” project is, therefore, a fully considered project for which the entire client program has been evaluated. After going through the through the three project types, most of our renovation projects fall into the “A” and “C” categories.
Using our A, B, or C algorithm also provides a framework when touring out-of-City projects and assessing potential scope. If I were given a second dollar for every time I’ve been told a house was definitely not a tear-down…… And just as in the City, sometimes a more surgical intervention is the best option. Whether in the City or in the country, we are keen to go through this scope analysis and budget assessment when buyers are considering an acquisition, rather than after they have signed contracts. It is much easier to adjust budget and schedule expectations and to set projects on solid footings before one’s imaginary or real rich uncle has written the check.