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…
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.
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..
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.
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.
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.
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.
In NYC, truth is stranger than fiction. Some people will swallow all kinds of misinfinformation but will question and honest, true story.
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.
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.
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.