6+ Unit In New York
Is it true that all 6+ unit in new york are rent controlled? I was talking to a broker today, she told me dont get into any buildings of 6+ unit because of rent control. A maximum increase of 4% each year, is this true? How do I get around that? Advise please. Thank you.
Yep, I heard the same thing a few weeks ago from a broker/investor. This guy is a very knowledgeable guy who's has a great deal of experience in the business, both as an active investor and a broker in several multmillion dollar deals throughout the city.
I would bet there are other malodorous restrictions in N.Y. Just look at what we have here in the Bay Area in S.F. , Berkeley, etc.
I don't know if this one passed in S.F. but I heard that one proposed ammendment would make new owners responsible for illegal rent raises of previous owners.
I've got a bro livin up in Montreal where the rents are controlled similarly. They have a certain percentage that the rent can increase every year, but there is a catch - say the landlord decides to rent to some unknowing out-of-towner, like my bro for example. He can charge anything he wants to my bro, and if my bro doesn't dispute it within a specified period of time (I think 10 days after signing the lease), he gets away with it. When said bro did find out that he was paying 200 bucks more than his neighbors who had been there and knew the rules, there was nothing he could do about it. But of course that is Canada. I just thought you might find it interesting. And besides, that 200 bucks was Canadian, so it was really only about 50 cents to him, hahahahahaha! Just kidding about that. Zach
Is the glass half full or half empty???
If investors are running from 6+ units there will be a shortage of buyers = soft market = better prices = more motivated sellers.
If you pick up a property at .60 cents on the dollar, will you be complaining that you could rent it for $20 more per month?
Does the state set a benchmark or a max of what you can rent for? Can you do a 15% increase when you turn over tenants, but only 4% increase while they're there? Find out the details. Could be a fantastic opportunity.
BTW, the inflation rate, over time, on a national average is about 3%.
While looking at all details, and cash flow is extremely important, even more important is how you buy and how deep a discount you are getting, which will effect your NOI and cash flow.
Just bec. of rent control does not mean there are not great deals that are cash flowing. Look at all the numbers, and make a logical business decision based on what the numbers are saying to you. Best, Dave
Yes, Rent Control can suck, but there are ways around it, albeit tricky....
Actually the NYtimes had a big article about it a month ago or so...
Basically, you can't evict a person in NY if they are good tenants and pay their rent, (althopugh sometimes you can't even evict the bad ones). The way investors are doing this is kind of shady, and I've never done it, basically, buy a unit, practically any size. The loophole for eviction of rent-control tenants in NY is that if you are to convert the building to your primary residence, or the residence of your immediate family, (siblings, parents, etc...) you can evict the current tenants, and do so. Thereafter, if your family decides to move out, you may then re-rent the apartments at pretty much whatever the market will bear.
Another way is to file court proceedings to use the building for religious purposes. If you use the building for the church of the holy dollar sign, or whatever religion floats your boat, the courts have a hard time ruling against it. Any shmuck lawyer will tell you it's BS, but I've seen it happen all over manhattan and Brooklyn.
Lastly, set up surveilance, and prove that the tenant does not use the apt. as their primary residence. It can be tough, and this might be the most difficult way, but it's sure-fire if you've got the goods on them.
Nevertheless, fear renting residentials in NY. Believe me, its no picnic, and the majority of the tenants know the laws all too well. I try to rent to midwesterners who move to the city. They come in blind, and they're easy to deal with. Plus, after about a year in the apartment, they either always move back to the midwest, or out to Brooklyn, Jersey, LI, whatever.
Just my 2 cents.
it's amazing how two people can read the same article and come away with completely different conclusions.
Based on what I read in that article, the court had not, at this point, decided whether or not the intent to convert a 23 unit apt bldg into a single primary residence was legal. You also forgot to mention that 10 of the 23 tenants agreed to move out for the small sum of $50,000. Most of us don't have that kind cash lying around. And finally it was the tenants that put the video camera up to prove primary residency? not the landlord. The tenants lost their case.
The bottom line I got out of that article was getting around rent control is a costly propostion for the landlord; and there are also tenants (and landlord blatantly trying to abuse the system).