On Becoming a Landlord
I am seeking advice and insight from people who have had experience owner occupying units in a townhouse/being landlords in nyc. Putting in offers on 3 and 4 family brownstones in Harlem. Will occupy the lower duplex and rent out the other units. One of the renters will be a trusted family member. The other…
I am seeking advice and insight from people who have had experience owner occupying units in a townhouse/being landlords in nyc. Putting in offers on 3 and 4 family brownstones in Harlem. Will occupy the lower duplex and rent out the other units. One of the renters will be a trusted family member. The other unit(s) will need to find tenants. The rental income will be crucial to being able to afford the property. Thanks in advance for your input and sharing your experience on any of the below questions.
Costs
-How many months worth of mortgage payment reserve is wise?
-On a new renovation, given a solid engineer report, how much should we have saved for “just in case”
Finding Tenants
-Vacancies-How long should we
expect it to take to find tenants. Where have people been most successful-friends of friends/craigslist/broker?
Other than credit check, deposits, meeting the people and getting a feel for them, what to look for to (as best as possible) avoid payment issues and other “drama.” I have heard so many horror stories about how hard it can be to evict people.
Managing Tenants-what should we expect in terms of time commitment
Why exclude pets? There are so many nice people who have pets that are looking for apartments. Cats or a small dog, I don’t see the problem, and you can always ask for a one time non-refundable pet fee that would cover any damage.
Also property taxes on 4 family homes are through the roof, I would also go for the 3 family.
Just saw this posting and will add my two cents even though a lot has been posted already.
We’ve renovated several brownstones in Halem into 4-family rentals, so have had a bunch of experience as landlords there for the past several years.
A couple of notes:
1) You might want to lean towards a 3 family if you can as taxes will be much lower.
2) Though it’s prudent to have some reserve, on buildings that we gut renovated, we’ve never had a “large” unexpected expense. If all systems are new, there really is nothing that catestrophic that can go wrong. If I had to pull a number out of my hat, if you wanted to just sleep better, it might be $10K.
3) For a number of years, vacancies were a non-issue for us. We had little turnover and tended to do very nice renovations (www.harlemhome.com), so we usually were able to rent things during the last month of the prior tenant’s lease. As I think others have suggested, Craigslist has been our main way of finding tenants. Photos are key. Realtors have never done much good for us uptown on rentals.
4) We use landlordguard.com for our credit checks. Pretty simple and straight forward web site. Costs about $16 to do a check. If you go to harlemhome.com, in our rental application section I have a cover letter that tells what we require from tenants. You have to look at the numbers and also go with your gut to an extent. If something doesn’t “feel right,” you have to learn to say “no.”
5) If your building is well renovated and you pick good tenants, management of the tenants is very simple. I would recomment finding “a guy” who you can pay to pull garbage, sweep out front, shovel snow, put out salt, etc. You can usually find someone for $25-$30 per week, which is well worth the price.
Note, if you’re buying something that needs renovation, our firm offers design/build services and could handle the whole project for you.
Mike Vinocur
mvinocur@buildingequitynyc.com
Managing Tenants-what should we expect in terms of time commitment
“Plus they have no idea what a sweater is when it`s winter. They wear boxer shorts and loungy stuff and ask for more heat.”
OMG, hilarious. Sounds like a sorority-Victoria’s Secret ad in there. Of course, contrast this with my two sweaters, hat, scarf. So sexy. FInally I’m warm!
You won’t get the vacancy rate this way, but since vacancy rate, like “market rent” is just an expression of supply and demand you could try this. Before strongly considering any purchase relying on rental income, or a similar decision, take a few days “play renter” in the area. Search Craigslist, call people to inquire, even see a few places to get a sense of the demand (i.e., how thrilled/indifferent are those with the supply to see you with your potential demand.) You’ll also see what you’re up against as a landlord in terms of quality, which as we all know can vary widely in this city with housing built before the advent of electricity, and every decade since.
That said, I believe city-data.com has vacancy rate info, but this may not answer your question. Stats are too old, and too general. For instance, my 2 family is in a not-too-desirable area with a 1-3% vacancy rate, according to such stats. I’m sure the rate is low because there is very, very little supply. But demand isn’t that high either for this particular area. Moreover, because it’s just two units, there is no feasible way to have actual annual vacancy at any value between 0 and 4%
How do you finding the residentaly vacancy rate of an neighborhood?
Wow Folks.. Thanks a Million for all the advice. This has been extremely helpful. Great forum.. The property we are bidding on is completely renovated. New Roof, Boilers. One of the renters will be my mother and she will be paying less than the “market” rent, but im not in the least worried about issues there. The units are nice. The block is also nice. Most importantly, the unit we will own is incredible and so spacious and if all works out well, our costs will be so much lower than anything else we could buy. Will keep all the comments in mind and will certainly have more to inquire about once we actually become owners and landlords.
Have to agree wholeheartedly with Hank on this one:
ROB: “Your diatribe(s)only accentuate your misery in life.”
Come on, give it up, really. Your opinion on pretty much everything is quite pathetic, not very smart or evolved, and SUPER annoying. There, I’ve said what I’ve been thinking while reading these posts over the past few months. I – like most – come here to learn, gather the opinions of those with experience, knowledge and intelligence about brooklyn real estate and community, not suffer by listening to your whining.
FWIW, we take two months’ security + first month’s rent. Always have, always will.
Renting directly via Craigslist means they save the broker fee, and you also get to know prospectives from the jump (is she the kind of girl who says she’ll come see the place at noon, but not show up until 2:00, and doesn’t call to say she’ll be late?).
Be the landlord you would like to have, and never rent a place out in a condition you wouldn’t live in yourself.
I have many other thoughts on landlording, but these are the most critical.
Good luck.
What do they complain about?