Read Here Before You Even Consider Combining Two Apartments

April 11, 2016

By Leah Hochbaum Rosner


Feel like you’ve been searching forever yet still can’t seem to find the perfect three-bedroom? Maybe it’s time you find two separate units and merge them together in order to build your dream home. Bond New York’s Jo-Anne Sinnott and Douglas Elliman’s Nadia Bartolucci and Rachel Altschuler —plus a quick check-in with a mortgage expert—tell you all you need to know about combining apartments in this week’s Buy Curious.


It’s hard to find a three-bedroom that meets my needs and I’m thinking of combining two. I’m interested in either vertical or horizontal combinations. What do I need to know?


When your home is starting to feel claustrophobically small, it’s normal to think about buying the apartment next door, knocking down the walls and saving yourself the trouble of having to pack and move. “It is very tempting to dream of your newly designed home from the comfort of your living room and say, ‘Give me a sledgehammer’,” says Bond’s Sinnott. But while it sounds simple, combining two apartments (whether you live in one now or not) can actually be a real headache—and it isn’t for the faint of heart (or the light of wallet).

Here are some questions you should ask before embarking on a combination of your own:

Why would a buyer choose to combine two units rather than try to find an existing unit that meets their needs?

There’s the occasional serendipitous opportunity where a neighbor decides to move and approaches those next door with an offer to sell, which is hard to resist if you’re feeling crowded and are in the market to buy a new place, anyway. But more often than not, buyers only resort to combining units after they’ve been searching for a larger home for some time. “If nothing feels right, a buyer will focus on combining units and creating that dream home,” says Sinnott.

“You can end up with more space and/or the ability to configure a unique layout that could be more desirable,” say Bartolucci and Altschuler, who jointly run the Altschuler Bartolucci Team at Douglas Elliman. “Also, by purchasing two units and then combining them, that usually means a discount on the price because then a buyer will have to file plans, obtain board approval and carry the apartment for several months while the combination takes place.”

Do all buildings allow this practice?

According to Bartolucci and Altschuler, it varies from building to building. “It depends on the structural orientation of the building and on the general rules of the cooperative or condo board,” they say.

Many limit combinations to side-by-side units, adds Sinnott, noting that while both condo and co-op buildings are wary of creating duplexes—which calls for more complicated construction than side-by-side combos and therefore the potential for damage to the building—co-op boards seem especially “skittish if too many votes are concentrated among a few shareholders. More shares equals more power.”

What do buyers looking to combine units need to know before starting any work?

“The first thing you would need to know is if the units are structurally able to be combined,” says Sinnott. You’ll need to look at the original plans and discern where the load-bearing walls are, where the water and gas lines are, and the like. “You also want to keep private spaces like bedrooms away from noisier public spaces like kitchens and living rooms,” she says.

According to Bartolucci and Altschuler, it’s also important to be aware of all of the risks involved. “One major risk—especially in cooperatives—is that once you present plans to a cooperative board for approval, that does not mean you are instantly approved. There could still be back and forth, and the board might not sign off on your desired combination floorplan for various reasons.”

What are some pros of combining units?

“You can make it your own and get what you want,” says Sinnott. “Add bedrooms, a den, closets. Get a bigger kitchen. If you combine with your current unit, you are still in the same building, with the same schools, same commute, same neighbors. Even if you need to purchase two units to combine, you are adding a premium value rather than if you purchased one unit. And you have the luxury of getting exactly what you want.”

What are some cons?

“Many people dreaming about combination apartments don’t realize that they will be taking on additional maintenance or monthly charges,” says Sinnott. In addition to the sometimes shockingly sky-high monthlies, combined apartments are known to have rather quirky layouts.

“I remember one high-end combination being sold by investors that at first sight was terrific—a large living room with high ceilings on a top floor with a set-back wrap terrace,” she explains. “Then as you moved through the unit the fun began—long hallways that snaked through a rabbit warren of many small rooms. Yes, there were many bedrooms and the square footage was increased, but there was so much wasted space and the actual living space was cramped.”

Plus, she adds, construction costs are almost always higher than you’d expect. “And those who are financing need to consider limitations that some lenders may place on combinations.”

What rules do buyers need to keep in mind when combining units?

Buyers must follow the condo or co-op’s alteration agreements. “For example,” say Bartolucci and Altschuler, “if there is a ‘no wet over dry’ rule, this means that all of the plumbing must be in line with the other apartments’ plumbing in the building, to avoid unnecessary leaks.”

You must also be mindful of the hours in which you’re permitted to do construction, usually only during workdays. Some buildings (usually stricter co-ops) also have “summer work rules.” This means that one can only work on the apartments between Memorial Day and Labor Day. “This is an important point because depending on how extensive the scope of work is, one could be carrying the apartments”—in other words, paying for the mortgage and maintenance/common charges for them—”for a while before even setting foot in them,” say Bartolucci and Altschuler.

How long does it take?

It depends on the nature of the work, of course. Some combos will be easier and quicker than others just by virtue of how they’re set up (if they’re horizontal instead of vertical, for example). It also depends on whether your building has the aforementioned summer work rules.

“It can take six months to years depending on the scope of the combination,” say Bartolucci and Altschuler.

Horizontal vs. vertical combinations?

“Contractors will tell you that side-by-side combos are easier to accomplish, and therefore less expensive,” says Sinnott. With vertical combinations, floors must be broken through, and “more electrical, water pipes and other structural issues can lurk in the floor. A good contractor can get around the pitfalls and can work with the building to come up with an amenable plan.”

Will you be able to live there while the work is being done?

It all depends on the amount of work. “Some of the less invasive projects will allow you live there,” says Sinnott. But even then you’d need to be prepareded to deal with construction noise and dust on a daily basis. She advises moving into a hotel for a long-term stay or to sublet another apartment until construction is completed so you can steer clear of the debris.

How does financing work?

If an owner purchases an adjacent unit to combine into his primary residence, for which there is a mortgage, he can refinance and have one mortgage for the combined unit,” says Sinnott.

If a buyer is purchasing two units to combine at once, things can get a bit more complicated; according toRobbie Gendels of National Cooperative Bank (FYI, a Brick sponsor), Fannie Mae doesn’t currently offer a product to combine units. She tells us that “you may be able to refinance into a 30-year fixed afterward.”

Adds Julie Teitel, a senior loan officer at Everbank: “Most banks will have you do three separate appraisals—one for each unit and one for the combined unit. They’ll need to see plans and specs. And you’ll need to put one-and-a-half times the cost of breakthrough into an escrow account.” These loans are more scrutinized, she says, because of the added level of risk involved when the apartments are still separate.

But, there might be another option. According to James McPartland, of Rhode Island-based Citizens Bank, which extended its reach in New York in the last 12 months, Citizens offers a renovation loan product that allows buyers to take a 30-year fixed mortgage or an adjustable-rate mortgage based on the purchase price plus the construction cost, if you’re buying two units at once to combine. (And you can borrow up to 80 percent of the purchase price up to around $2 million, as is standard.)

If you already own an apartment and want to purchase an adjacent one, McPartland says, you can get the same loan, but Citizens Bank will go off the future value of the combined apartment (based on comparables in the neighborhood or building). The first 12 months and/or construction period will be interest-only.

Underwriting standards are the same as normal/portfolio loans, and credit requirements are dependent on the loan amount, “but typically we like to have 660 scores up to $750,000 loan amounts and 700 scores up to $2 million for single families or condos,” says McPartland. “We like to be below 80 percent of the combined value if you are buying the unit next door—in other words, if the future finished-and-combined unit is going to be worth $2.5 million, we will lend you $2 million.”

McPartland says usually, buyers “have to refinance out of construction loans, so those are riskier and can depend on fluctuating rates. This way, you’re guaranteed a rate and you don’t have to pay fees twice, either.” (He says the loan is quickly becoming a huge part of their business.) “Since prices of three- and four-bedroom units continue to get higher and higher, the combination of two one-bedroom apartments to make a three-bedroom seems to be a much cheaper alternative, even with the construction costs,” he says.

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