Buying a house with tenants???

How do you know that the house isn't rent stabilized? If they've been there for a long time and pay minimal rent then irrespective of whether the previous owner(s) have kept up with DHCR and HPD registration you shouldn't assume that the tenants won't be rent stabilized.

If you intend to occupy the whole house for yourself you may eventually be able to evict them all however if any of them are over 60 years then you'll have a very hard time so doing.

This sounds definitely like a perfect case of Caveat emptor!

Posted by: guest at February 19, 2008 11:21 AM

My God, this is Brooklyn, not Oz, have you talked to an attorney? What is the explanation for why they are not paying rent? Please know (and I am not a landlord or particularly pro-landlord), but the courts in NYC tend to favor tenants -this is because many landlords are large corporations who are raking it in and the tenants would end up homeless or otherwise the responsibility of the city to house. This is not true probably for owner occupied with a few apts, but you will be treated the same. Please talk to lawyer and look realistically at the situation.

Posted by: guest at February 19, 2008 12:24 PM

there's no way to say this without being mean, but how dumb are you?
it's really hard to believe you got this far down the road without talking to a lawyer about this.

Posted by: guest at February 19, 2008 12:36 PM

First, ignore the bozos around here with their "how dumb are you" talk or implying you don't know whether your building is rent controlled or not. They all hail from the well stocked group of losers that sit home alone Friday and saturday nights on the Internet because everyone they've ever asked out found them just as obnoxious.

One thing you may be interested in is this: I had a dispute with a landlord (I am a landlord now) that I took to a lawyer, who told me that any NYC judge, once asked, will grant a tenant 6 months to find a new place. So, even if you can get them out (not saying you can or can't), but if they choose to get a lawyer involved, you could be in for a pretty significant wait.

Posted by: guest at February 19, 2008 12:45 PM

12:45 - tenants can get something like a six month extension to move at housing court IF, and only IF they agree to pay rent and on time.

Posted by: guest at February 19, 2008 1:40 PM

1:40 - 12:45 here. Not doubting you at all, and obviously that would be a different situation than the OP is now encountering (i.e. tenants actually paying rent), but it is an important variable to take into consideration.

Posted by: guest at February 19, 2008 2:00 PM

the advice is NOT to seek advice from anyone -- like all of us -- who doesn't know the specifics.
it's so basic, that's why it's hard to take the whole post seriously.
no one buys a house without knowing what happens to the tenants.

Posted by: guest at February 19, 2008 3:21 PM

First, I am the OP and I am in fact a lawyer so I know all too well that PRIOR to making an offer, I would seek out a real estate lawyer. Second, obviously, this would be headache, but the discount being offered seems to me to be worth the headache (provided we can in fact remove the tenants). (The discount is on the order of $500-600K). Third, I was just asking if anyone encountered this situation in the past, thus obviating the need to investigate further. (I.e., if we could not have the tenants removed, it is not worth pursuing.) Fourth, I was informed that the house is NOT rent stabilized/controlled - obviously, before making an offer, we would require confirmation of that. Fifth, my understanding is that the owner let multiple people stay in the house as a "charitable" issue. (He felt he was doing a good deed by letting others stay in his house for free or for a nominal fee.)

Thanks for all the "help" - I love how "helpful" everyone on this site tends to be.

Posted by: guest at February 19, 2008 3:57 PM

Even if this building is being offered to you for free, it's probably a bad deal. Like we say in Brooklyn, fuhgeddabowdit.

Posted by: guest at February 19, 2008 3:59 PM

OP, why so snippy? In fairness, you gave *no* specifics, so how was anyone to judge whether it would be easily accomplished or not, or whether their own experiences were comparable?

If you aren't forthcoming with details, then you'll suffer from very vague and unhelpful advice.

Posted by: guest at February 19, 2008 4:54 PM

OP again -

1) Ysabelle- I never said I was a real estate lawyer (I am not).
2) The details I gave were as follows:
(a) 6 tenants in place.
(b) The house is not rent controlled or rent stabilized.
(c) The tenants do NOT have leases and 3 of them do not even pay any rent.
3) I was simply asking if we could evict these tenants ASSUMING the above facts were true.
4) As for me being snippy - that was because of the following comment: "there's no way to say this without being mean, but how dumb are you?
it's really hard to believe you got this far down the road without talking to a lawyer about this."

Rereading the comments, I guess that was the only one that called for a snippy response. Accordingly, I apologize for my follow up.

Posted by: guest at February 19, 2008 4:59 PM

My wife and I are in a similar situation. We have the oppotunity to buy with 3 tenants in place with no leases. Our attorney who is a very experienced L/T attorney says it will take approximately six momths to remove them. We are purchasing the house for $550,000. It is estimated to be worth over a Mil after some moderate rehab. The owner has agreed to begin the vacancy proceedings but not agreed to deliver vacant. We have decided that a half million in equity far out weighs six months of inconvienence. There are tons of properties on the market like this that people are being scared away from. Just do your homework and get good legal advice.

Posted by: guest at February 19, 2008 5:02 PM

And hope that none of the non-paying tenants are lunatics-in-place who may burn the place down during the six months you've budgeted to remove them - or return to harass you on the street, once you have. Been there, done that. Avoid.

Posted by: guest at February 19, 2008 7:24 PM

Answer;
Yes you can evict. Holdover proceeding. no leases, you are looking at 6 months. Name everyone individually in the petition, include Jane and John Doe. Will not cost alot if done without a lawyer but you better dot every i and cross every t and mind every court date. Good luck.

Posted by: guest at February 19, 2008 8:33 PM

Just to further this line of conversation....I am looking to buy a Manhattan townhouse with rent stabilized, possibly rent controlled tenants. Assuming, none are over 60 or disalbed, how easy or hard is it to evict them if I want to use the entire house for my single family (sorry no other details, as we are in the initial stages)

Posted by: guest at February 19, 2008 8:55 PM

This is Brownstone brooklyns best kept secret. Find distressed property with stressed out landlords who had zero offers because of tenants with no legal rights, except a little time to find a new place. Offer to take the property as-is including all the violations and reduce the offer by the cost of removing the violations. You get the property for pennies on the dollar. Don't listen to the nay-sayers. When the secret gets out, they will be crying again that they missed the boat.

Posted by: guest at February 20, 2008 11:34 AM

Rent guidelines board publishes a list of all rent stabilized units in buildings by address and zip code. Look online

Posted by: guest at February 20, 2008 12:58 PM

Some thoughts:

a 500-600k discount amortized over 6 tenants = ~100k per tenant. Just on the face of it, that is not anywhere enough of a deal when you add in the cost of producing the vacancies you want, including legal fees, loss of rent, potential buyouts, your time and aggravation and potential loss of your own productivity while you are in court and so on.

Why aren't 3 of the tenants paying rent? Remember, you are negotiating to buy from the same person they aren't paying rent to, and they may have some good reasons for not paying rent.

I'll go out on a limb here, as I'm sure anything is possible, but...... As far as I know, there is no such thing as a building in New York City with over 5 units that isn't rent stabilized. In fact, if anyone knows of one, I'd really like to know about it. So, either you are looking into buying a rent stabilized building which someone is lying to you about the status of, or one or more of the units are illegal units, which would be another kind of headache.

All of which begs two questions:
1) why you are asking for advice on this here before discussing the situation with a good landlord/tenant lawyer - not just a real estate lawyer as has been mentioned here.
2) exactly what is special about this building, or what do you think you're getting for nothing that would preclude you from simply finding a better property and spending some of that "discount" you mentioned up front. Because you will definitely spend that money, or most of it, or maybe more, before you're done with the deal.

good luck.

Posted by: guest at February 20, 2008 7:03 PM

7:03 PM - to answer a few of your questions:

1) My understand is that the owner of the property was a bit senile and simply allowed people to stay in his house rent free (or paying $200/month as a pittance).

2) You state "As far as I know, there is no such thing as a building in New York City with over 5 units that isn't rent stabilized." That is obviously not true as I have lived in MANY large apartment buildings in New York City with many more units than 5 which were not rent stabilized.

3) As for what is so great about this building - it has tons of original detail; it is substantially discounted to what it would otherwise cost without tenants; and I have no reason to assume that the evictions will not go through despite taking 6 months and hving to pay legal fees.

4) The house is a legal 2 family and not a multi family unit - clearly these "tenants" are illegal. does that affect any of the analysis?

Thanks

Posted by: guest at February 20, 2008 8:49 PM

There are many, many buildings with 6+ units in this city that do not have rent stabilized units.

This website is a useful resource, and much more reliable than the postings on this site:

http://www.housingnyc.com/html/resources/faq/rentstab.html

Posted by: guest at February 21, 2008 5:28 PM

7:03 here -

There are buildings with over six units in nyc that have UNITS that aren't stabilized, and also certain buildings that don't fall under rent stabilization, but here are the guidelines from the website:

Rent Stabilization:

In NYC, rent stabilized apartments are those apartments in buildings of six or more units built between February 1, 1947 and January 1, 1974.

Tenants in buildings of six or more units built before February 1, 1947 and who moved in after June 30, 1971 are also covered by rent stabilization.

A third category of rent stabilized apartments covers buildings with three or more apartments constructed or extensively renovated since 1974 with special tax benefits. Generally, these buildings are stabilized only while the tax benefits continue.

Many Exceptions:

THERE ARE NUMEROUS EXCEPTIONS TO BOTH OF THESE GENERAL CATEGORIES. For example, if the legal rent exceeded $2,000 following a vacancy the unit may be deregulated. Or, if the unit was in a building converted to a co-op it may be deregulated upon vacancy.

To determine if your apartment is under rent stabilization or rent control, contact the New York State Division of Housing and Community Renewal at (718) 739-6400 or (212) 961-8930.

So, you may have lived in apartments that were not rent stabilized, but they would have had to not fit the above, say a market rate rental constructed after 1974, or else individual units that were destabilized due to the rent getting over the limits.

Are there 6 kitchens in this house? If there are, and it's supposedly a legal 2, then it isn't something I would be getting into.

Again, in my personal view, without seeing the house, I think you are underestimating the cost and effort involved in producing a tenant free house, and doing the work that I would expect to be necessary in a house owned by a senile owner with several possibly illegal tenancies.

Posted by: guest at February 22, 2008 1:25 PM

I have a completely different scenario. I'm considering a purchase of a 2 bedroom 1 Bath Coop in brooklyn -- that currently has a rent stabalized/controlled tenant in place paying appx only $120-$150 over the maintenance.

WHAT DO YOU GUYS THINK THE PLACE IS WORTH BASED ON THE FOLLOWING INFORMATION AND IS THE ASKING PRICE OF $350K TOO MUCH.

Here are a few pices of information.

A) I'm looking at the property as a part investment, part future home possibility.
B) The apartment needs a full gut renovation (IMO).
C) The Asking price is about 350k -- if it were full renovated (100K) without a tenant in place it would probably be asking 750k and would probabyl get at least 700k in a sale.
D) The tenant is 68 yo and assuming he's in good health.

Here's some info about me and my thoughts about this property.

A) I think it's priced too high unless of course you own a bunch of rental real estate (for a long time) and are simply looking to reduce your tax situation.
B) I can pay all cash, and have another property to live in right now, and would not be looking to move to brooklyn for probably another 4-5 years anyways.
C) can i structure buying it at a certain price, and give the seller bonuses based on how early i can actually take control of the property?

Posted by: guest at March 14, 2008 2:49 PM