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April 8, 2009
Buying a Rent-Stabilized Bldg
My parents and I were looking at a 6 family building with 4 rent stabilized tenants, 1 vacant, and the owners apartment. My parents would take the owners place and I would take 2 of the other apts to combine for my own growing family. Pleeeeease don't go all rent-stabilized crazy on me, but would I be able to take one of the rent stabilized places over to do this? If so, can I pick any of the stabilized units? I suppose I would pick the one paying the least since the higher income from the others is what is making my mortgage manageable. Does it matter which one I decide to ask to move out? Any thoughts on the matter are appreciated. I'm really not looking to be some evil landlord- just want a place for my family and parents to live with a bit of income.
Comments
it may be possible, but look forward to 3 years of litigation for starters...it seems like a really stupid idea to me
Posted by: eman1234 at April 7, 2009 9:22 PM
Why would it be 3 years? I thought you are allowed to take back an apt if it is for owner use? I will obviously do much more research if we decide to go forward, but I'm interested to hear thoughts, opinions, etc.
The only reason we are even considering doing this and not just going the 2 family route is because we like the building so much.
Posted by: yanks21 at April 7, 2009 9:29 PM
It's currently possible but very very difficult. However, they may be reforming rent stabilization laws to prevent lease non-tender for owner occupancy.
That said, there is a price where it would make sense, but I doubt the seller would accept at that price. For better or worse, the law is more worried about rent stabilized tenants than you.
Posted by: slick at April 7, 2009 9:34 PM
Did you read about the Economakis (spelling?) family who went through all that litigation in the E. Village to get use of a rent stabilized apt for his own personal use? I think they are all still in court.
A lot of people do accept the buyouts offered to them to move, so really it could work out in your favor or go terribly against you depending upon who you are asking to leave and what you are offering to expedite the process.
Posted by: bqe1970 at April 7, 2009 9:42 PM
If any of the tenants are 62 or older, you can't get their apartment back.
Here's the DHCR Fact Sheet:
http://www.housingnyc.com/html/resources/dhcr/dhcr10.html
Since the Democrats have the majority now (albeit by only one vote) in the State Senate, liberals are proposing all sorts of new laws to limit private property rights and allow squatters (aka rent regulated tenants) basically unlimited rights over property other private individual's own. It's straight out of the Communist Manifesto.
You'd be taking a big risk buying this building at this time. Of course, if the price is too good to pass up, roll the dice and give it a shot. Just be prepared for the worst.
Posted by: IronBalls at April 7, 2009 9:57 PM
As of a few years ago all you had to do was give 120 days (before expiration of lease) notice or non-renewal due to impending owner occupation, and all was fine.
Haven't had to deal with it in a while so things might have changed slightly, but for years it was 120 days notice.
Posted by: christopher at April 7, 2009 11:46 PM
You could offer the tenants a ridiculously large sum of money to leave the apartment - am talking $30-50K - but some of these RC tenants are savvy and will expect more
From what I have read on this board, people don't seem to think buying a building with RC tenants is the way to go unless you have a lot of time and money on your hands to deal with them.
Posted by: gemini10 at April 8, 2009 9:14 AM
Try casually meeting with the rent stabilized tenants to get a feel for them. It's been my experience that a change in ownership can tend to precipitate tenant moves as well. Don't tell the tenants that you're looking to take over an apartment, just talk to them about how long they've lived in the place and how they like it. Be polite and interested and let them do most of the talking. You'll learn alot about who sees the apartment as a home and who is just staying for the time being. You'll have a tough time getting the former to move out, especially if they have children and, as noted above, it will be next to impossible to make a senior move if they don't want to.
Posted by: Bessie at April 8, 2009 9:51 AM
Rent control is one thing, rent stabilized is another. You have to own the building as an individual not a corporation to be able to take an apartment for yourself. (believe me i know I made that mistake.) you have to live in the apartment that you evict the tenants from. You can serve the tenant with the notice at the time you are required to serve him with the renewal lease for a rent stabilized tenant. For more info try those Nolo Press books on Landlord Rights. Those cover these issues very well.
Posted by: tsarina at April 8, 2009 9:54 AM
Rent-stabilized and Rent conrolled are 2 very different things. And very different laws apply to them. Are the tenants RS or RC?
Posted by: bxgrl at April 8, 2009 9:58 AM
This is what NYC Rent Guildelines states:
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.
---------------------------------------
What exactly is rent stabilization?
New York City has a system of rent regulation known as "rent stabilization." The system was enacted in 1969 when rents were rising sharply in many post-war buildings. The system has been extended and amended frequently, and now about 1 million apartments in the City are covered by rent stabilization. Rent stabilized tenants are protected from sharp increases in rent and have the right to renew their leases. The Rent Guidelines Board sets the allowable percentage increase for renewal leases each year. Current and past guidelines can be accessed here.
-------------------------------------------
Can my landlord evict me and use my stabilized apartment for his family, and how many apartments in the building can the landlord take?
One of the advantages of being a rent stabilized tenant is the right to renew your lease. This right holds with few exceptions, and eviction for owner occupancy by the landlord or a family member is one of the exceptions.
The rent regulation laws allow the landlord of a rent stabilized building to take over one or more apartments for family use. However, he/she must give you 90 to 150 days notice before your existing lease expires that it will not be renewed. In addition, he/she must be able to prove that the apartment will be for family use.
Note that if you are 62 or older or disabled you have additional protections. If you do wish to stay in the apartment, you could simply stay put and wait for the landlord to serve you with eviction papers. The landlord will then have to prove in court that he needs the apartment for family use. The court may or may not agree with his assessment.
Regarding the number of apartments an owner can take: The Rent Stabilization Law and Code is a little vague about the number of apartments that an owner may occupy: "...only one of the individual owners of any building, whether such ownership is by joint tenancy, tenancy in common, or tenancy by the entirety to recover possession of one or more dwelling units for personal use and occupancy." However, the DHCR informs us that an owner can take more than one unit for his or his relative's occupancy.
Contact DHCR at (718) 739-6400 or (212) 961-8930 for additional information on this subject, and see the fact sheet on eviction for owner occupancy.
Posted by: bxgrl at April 8, 2009 10:05 AM
Is one of you a lawyer?
If not, I would forget it.
Posted by: sam at April 8, 2009 10:19 AM
My main advice -- don't depend on a comments section to get your advice!!
Case in point -- the poster who points to the Economakis case as relevant for your concerns. NOT. Google Economakis and you'll see. This family is trying to prove that they really plan to convert their 60-room, 11,575-square-foot East Village tenement into a single-family residence -- rent stabilized tenants suspect (probably rightly) that this is b.s.
Posted by: southbrooklyn at April 8, 2009 10:27 AM
can't you just buy a real house or an available apartment and leave people's lives alone? sorry, im just giving you the opinion of a lot of people, even tho i know it's not popular here.
*rob*
Posted by: PitbullNYC at April 8, 2009 10:28 AM
bessie hit it on the head. the person who sees the unit as their home will fight. not everyone sees their apartment as a true home, their neighborhood as their community.
while ny law gives tenants a lot of rights, it also favors small landlords who are really planning on living in the building. i wouldn't choose which unit to take on the rent roll because in the end, the lower the rent, in general, the longer the tenant has been a resident. it would be a hard move for anyone who has spent 17 years in a building. (that being said, my friend just willingly jumped ship on a regulated cheap apartment in the city for a nice garden apartment in clinton hill.) it will cost you as much money if not more over the long run to fight certain tenants.
for my money, with rent dropping 10%ish, it is a shoppers market, so i wouldnt base mortgage payments on inflated, raging economy rents.
Posted by: rtg at April 8, 2009 10:33 AM
sounds like a very bad idea to me.
Posted by: brickoven at April 8, 2009 10:34 AM
It can be done in theory. In practice, it tends to depend on the difference between R/S and free market rents.
To begin with, you need to know when the leases expire and plan your closing for at least 5 months before that. Then you give them a Golub notice, and be super-careful about service. Then you try to evict them.
What I would do here (assuming infinite money) is convert the two empty apts to 1; obtain a C of O for a five-family. Now rent out the owner's apt and the newly combined apartments.
Now you and your parents each go after two R/S apartments each.
Posted by: thwackamole1 at April 8, 2009 10:35 AM
It really is a bad idea.
Which tenant are you going to pick? The one who pays the least rent? Isn't that a little self-serving? DO you think the rent stabilization laws of the city would still be around if it were that easy to pick and chose who you wish to evict? If you are even asking this question, you are in over head. The only way this would work, and I know I am being a bit zinical here, is if you know Tony Soprano personally. That is how tenants are evicted in Brooklyn.
Sad but true.
Posted by: sam at April 8, 2009 10:40 AM
thwackamole1- why would you do it that way? They just want one other apartment- presently occupied- for the son to combine into his living space. Maybe I'm confused but I thought he said there is only 1 vacant apartment, the owner's apartment and 4 RS apartments- all occupied.
Posted by: bxgrl at April 8, 2009 10:47 AM
sorry, that's cynical.
Second cup of coffee is now in my hands.
Posted by: sam at April 8, 2009 10:48 AM
IronBalls, I can appreciate your steadfast commitment to ideology, but your suggested link between rent stabilization and the Communist Manifesto is absurd, and the idea that rent stabilized tenants are squatters is laughable (after all, they are living under a legal lease contract and paying the rent stipulated in that lease). If a property owner purchased a building before rent stabilization rules went into place, I have some sympathy for the fact that the rules of the game were changed on them, but given how long rent stabilization laws have been on the books, I doubt that applies to very many people on this board. I can sympathize with your opinion that the law tilts the benefits to renters vs landlords in these cases, but the law is also tilted towards property owners in many cases as well - for example, any homeowner who wants a truly equal playing field with renters can stop deducting mortgage interest on their tax returns since renters are not allowed to deduct the percentage of their rent that is going towards paying the landlord's interest payment.
Posted by: bkhabitant at April 8, 2009 10:49 AM
I wonder if those who squawk about property rights of owners also support AY and Ratner's eminent domain ousters?
Posted by: cmu at April 8, 2009 11:05 AM
I think ironballs is pretty accurte vis-a-vis the squatter analogy. Many rent-control and rent-regulated tenants live rent-free. They really are like legal squatters. It is a peculiarity of NYC and it courts.
Also I realize that there are many technical differences between a rent-control and rent-regulated tenants, but in reality, the differences are negligible. The bottom line is that they both have legally protected rights far surpassing those of the onwer. I know it is a bitter pill and many on this blog with limited experience do not accept the reality of the rental laws' teeth but they are real nonetheless and the buyer should beware.
Posted by: sam at April 8, 2009 11:06 AM
Sam: you have often stated this idea that rc and rs tenants live rent free. And now you are saying that the differences between the two are neglible. Neither of those positions is consistent with my experience. Could you explain how you support them? Thanks.
Posted by: Putnamdenizen at April 8, 2009 11:15 AM
Sam, I agree with you about your comment that many rc and rr tenants live rent free but to imply that they are squatters implies that they are violating property laws and laws governing ownership, which I do not think is fair to the tenants since they act well within their rights. Your second point is spot on though - potential buyers in these situations need to do their homework given the complexity of these laws. My only point is that the laws are on the books when people choose to buy property in these situations (often at a reduced price relative to a comparable unregulated property. To then complain about the situation and presence of legal residents is a bit disingenuous in my view.
Posted by: bkhabitant at April 8, 2009 11:16 AM
I only write about what I know from real life ecperience, not from how things "should" be but from how I actually see and experince them. I used to live in a co-op with rental tenants who had not paid a penny of rent in years claiming various "infractions". A clever renter, and some of them have become professionals at gaming the system, can make claim after claim and basically live rent-free. The landlord can't touch them. One of my childhood friends in fact, I don't hold this agaisnt her because I love her, has not paid rent on her UWS apartment in ten years because her ceiling plaster keeps bubbling. they repair it and it comes back. They need to just replace the ceiling with sheetrock but they have not done it yet. She is not old and is rent-regulated. An older person who is rent-controlled is like a walking God in housing court. A sacred personage. Fugghedabodit. Naturally if you luck out and get reasonable tentants who don't wish to game the system or whatever you could have a different view, but in NYC, those folks are getting rarer and rarer to find.
Posted by: sam at April 8, 2009 11:23 AM
sam claims his friend has not paid rent in 10 years b/c landlord can't be bothered to sheetrock the ceiling? yeah, right.
Posted by: southbrooklyn at April 8, 2009 11:36 AM
Yanks, first, consult a lawyer. Someone on BS recommended Marc Aronson on Smith St. in another thread. Poster said he knows his stuff, but I cannot verify. Christopher posted correctly above about 120 days notice before the lease is up, send it notarized and certified, ALWAYS. If the lease expired already, or none is in place, you will have no choice but to offer them a new lease, one or two year, then wait till 120 days before that lease expires to start any proceedings. If they are elderly, it will be really tough. Elderly AND rent control, pretty much untouchable. Forget for now about getting out the person with the cheapest rent, you will recoup that rent over time long term, but see which apt. will be easiest for you to make your long term abode. To help your matter, you may also have to get an architect to file plans with the city to make a primary residence duplex. This will help your cause, but you WILL have to follow through. You most likely have to make concessions, letting the tenants live rent free for certain number of months, or cash out of pocket, or both, depends on court proceedings. Most importantly, you CANNOT rent out an apt. evicted for family/personal use, last I remembered, for minimum three years, but that might have changed. If caught doing so, the previous tenants can sue the pants off you to regain their apartment as well as monetary damages, somewhere along the lines of three times each months rent from eviction to recovery, but don't quote me on that, I just know it's harsh. Overall, it can be done, but be patient and please make your decisions wisely, especially dealing with the lives of people you will be uprooting. You may want to personally explain the situation to those tenants, and see if there is something reasonable you can do for them, i.e. money, in order for them to move within a reasonable time frame, and keep all this out of the courts, which for the tenants will be in their best interests as well. You may be lucky enough to find someone who is willing to work with you, but proceed wisely and respectfully. Best of luck. Patience is a virtue.
Posted by: Escape From The Planet Of The What at April 8, 2009 11:39 AM
Look, the reason that building seems cheap is because it is rent regulated. If that six family was market rents, the building would cost double the price. Of course you look at it and say" I can live in one of the units" and the deal starts to make sense, but then you are trying to go around the system.
With six families, they are good investments, but you need to be very patient, maintain the property very well, and play by the rules. Then your investment will pay off. People will eventually leave or die, but it can take years.
If any of the apartments are rent controlled, then they will stay that way forever because of succession rights.
Before you start this venture, my advice to know everything there is to know about rent stabilization and control (and there is a lot of info to research) before you spend. Start with the dhcr website. That will take you days to read the whole thing. Then pull up all the court cases in NY involving theses disputes and study the judge's decisions and cases. This effort and knowledge will pay off and you will be in a much more powerful position.
Posted by: GabeS at April 8, 2009 11:51 AM
sam- what an awful story. I lived in a rent-stabilized apt. for years. It never ever occured to me to pull stunts like that. And even if I knew I could- I still wouldn't.
Posted by: bxgrl at April 8, 2009 12:13 PM
Hey Yanks not to sound harsh but this comment from eman is pretty accurate:
"it may be possible, but look forward to 3 years of litigation for starters...it seems like a really stupid idea to me"
Oh and IronBalls is spot on regarding the law changes in the works...my landlord has been stuck with 3 parasitic rent controlled tenants (well-off folks btw) for 10 years and has given up on litigation completely.
In our opinion the headache is not worth it even if you get the place @ 70% off and are in love with the place....lots of places coming on the market soon and at great discounts given the economic climate we live in.
Posted by: pierre de taille at April 8, 2009 12:14 PM
In NYC, truth is stranger than fiction. Some people will swallow all kinds of misinfinformation but will question and honest, true story.
Posted by: sam at April 8, 2009 12:19 PM
I don't doubt that there are RC/RS tenants who game the system but all the ones I have known (and I was one for about a decade) pay their rent on time every month. In fact, often they keep quiet about really crappy conditions because they are so grateful to have an apartment that they can afford.
Posted by: Carol Gardens at April 8, 2009 1:30 PM
Yanks21,
I guess everyone has a different experience, I would like to humbly share mine. I bought a 7 unit rent stabilized building in 1999. When the largest apartment came up for renewal,I expressed my interest in taking the unit and the tenant left without issue. Since then, we have had lots of turnover, and my rents are close to market rate. My building has quadrupled in value. I have never been to landlord/ tenant court and have a great relationship with all my tenants. My experience may be rare, but there were many who strongly advised not purchasing a RS building but my experience has been amazing and unbelievably profitable. I suggest checking out RSA which is an excellent resource for landlords and the rules and laws of rent stabilization. there is a lot to know and a mistake can be costly. good luck.
Posted by: owner12 at April 8, 2009 1:33 PM
yanks21 -
I'd say take many comments here with a grain of salt, except for maybe owner12 - real life experience (of a best case scenario). You've got the range from thwackamole1 (on the evil landlord end of the spectrum) advising you to get 4 apartments out of RS, to the people telling you it's a stupid idea to buy the place and assuming the worst case scenario.
You want a good lawyer experienced in representing landlords doing what you intend to do. Sounds it could be a reasonable gamble to me, because you'd get 2 vacant apartments without a struggle and the trick is to get just one more. Worst case you're stuck in a single unit for a while rather than 2 combined apartments. The path of least resistance is may be a 5 digit offer of walking money to tenants of one of the 4 apartments that could be combined with one of the 2 vacant ones. Probably better to go with how the apartments combine and who's most willing to walk rather than try to squeeze out the one with the cheapest rent, but you could adjust your offers up according to how low the rent is or how well it would work for you.
Posted by: Bklnite at April 8, 2009 1:41 PM
I am assuming that all of the tenants are white, or else you might not consider this purchase. If not, why not simply evict the family of color?
The rest, you can simply do your best to force them to adhere to your yppie set of trendy rules.
Posted by: Demander of Respect at April 8, 2009 2:15 PM
Get some legal advice. There are several firms in New York that specialize in these issues. (I manage some rent stabilized apts). I do not want to recommend any but you can find out pretty easily on the internet. Spending a few bucks on legal consultation may help you make the right decision..
Posted by: Cobblehillite at April 8, 2009 3:07 PM
Get some legal advice. There are several firms in New York that specialize in these issues. (I manage some rent stabilized apts). I do not want to recommend any but you can find out pretty easily on the internet. Spending a few bucks on legal consultation may help you make the right decision..
Posted by: Cobblehillite at April 8, 2009 3:07 PM
I purchased a six family in Bushwick in 1992. Again many people told me not to do it but I took a chance because the low sale price took the low rent roll into consideration. I needed a place to live and so I took over the previous owners apartment. I knew that before I had children that I would move out so I had no intention on ever occupying any other unit. At that time the city paid landlords as much as 10K to take families from the shelter system so as people moved out, it was more profitable for me to continue to rent the units because Section 8 paid the rent on time. I have had one or two minor problems with tenants over the years which I didn't take personal and considered part of doing business but I don't have any real horror stories. Needless to say that this has also been a profitable venture for me.
There are various agencies both private and city that new landlords can go to to take basic "landlord" courses. anyone considering purchasing a multi-family building should definitely take at least one of these courses. As Owner12 stated RSA has good information and so does Neighborhood Housing Services and HPD. There have been revisions in the housing court procedures through the years to prevent people from making false complaints against landlords in order not to pay rent. Now while complaints are filed, tenants must still pay rent but to the housing court until their case is settled.
The bottom line is that if you truly plan on occupying units in your building and you get the respresentation to help you prove your case, ultimately you will probably get your wish. It will take time and money though. Most important although technically the law is on your side, how would you feel about evicting someone to occupy the space? Would you be comfortable living in the building with the tenants who may have formed friendships with the family/person that you evict?
Posted by: Chosen at April 8, 2009 3:19 PM
Its simple - if the Tenants fight you, it will cost you a fortune in time and money - if they dont then Owner12s experience is possible. And as was also said - there is a big push to readjust RS laws, so if no matter what - you could buy and have the all the laws and projections for which you based your investment be immediately and irrevocably changed.
Posted by: fsrg at April 8, 2009 3:30 PM
No reason this couldn't be a win-win situation, especially with falling rents.
If a RS tenant is close to the market rate, then a cash offer might be a welcome windfall to them.
We used to live in an RS apt. on the UWS, paying 1700 when market was 2000 (what other units in our building were renting for). So we would have happily taken $15-20k to move on (or maybe less).
You have nothing to lose by asking, despite what other people say on this board. In our current building, there is an elderly R/C couple on the 5th floor (walkup). For them, 50k might get them a place with an elevator in a different neighborhood.
Posted by: Bolder at April 8, 2009 5:34 PM
Rent stabilization, OK...rent control, not so much. Just recently, the son of a couple who lives (with his parents in their rent controlled apartment) owned by an elderly friend tried to pay a portion of their $440 UWS rent with his own personal check. Hmmm....If the owner accepted it, that would establish the son as a tenant on record. Under WHAT rational is $440 a reasonable rent price???
Posted by: Minmin at April 9, 2009 9:12 AM
Don't do it unless you have a lawyer in the family and a ton of time and money to burn...
Posted by: VF at April 9, 2009 3:37 PM
bkhabitant,
Since many rent regulated tenants pay rents that are below what it costs to properly operate and maintain a apartments buildings, I'd say those rent regulated tenants are squatters.
Landlords like me are supporting these freeloaders. These people are squatting on my property, protected by arcane laws meant to help widows during WWII.
From my experience owning and managing rental properties in NYC for over a decade, I'd estimate at minimum 25% of regulated tenants in Manhattan and Brooklyn have other homes and keep their rent regulated apartments as second homes or illegally sublet them for a profit. It's almost impossible for a landlord to evict a regulated tenant for non-primary residence since all he or she has to do is continue to receive mail and voting registration at said address.
The current rent laws drastically reduce supply of rental housing in NYC by allowing cheaters to game the system while everyone else has to pay sky high rents. There are no rules to keeping a regulated apartment in NYC. The $175k/yr law only applies to apartments that rent for OVER $2000/mo while most rent stabilized apartments are below $1000/mo.
According to NY law, a billionaire could have rent regulated apartment as long as his registered rent is LESS than $2000/mo. Talk about absurd.
Posted by: IronBalls at April 9, 2009 9:43 PM
In my last post, I meant there are no "low income requirements" to qualify for rent regulated housing, so all arguments that the laws are necessary to help low income folks stay in NYC are bogus.
The politicians will never add a low income requirement since so many beneficiaries of rent regulated housing are wealthy and those individuals vote en masse.
Posted by: IronBalls at April 9, 2009 11:01 PM
Well I have to say I've been in my apartment for 37 years and 100k would not move me out.
As far as bkhabitant I've got a question for you. When no one was willing to either live or rent in your neighborhood. My landlord made me an offer on an apartment and when I took his offer I kept him afloat otherwise the building would have reverted back to the city for non payment of taxes and been abondoned.
My home (apartment) is my castle.
I have no idea why you bought property that you think squaters are on with no recourse.
Posted by: easywind at April 27, 2009 3:36 PM
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