New luxury rentals vs 3 family home rental units
All very helpful. Thank you!
Guest User | 5 years and 9 months ago
6
Please log in, in order to post replies!
6 replies
Guest User | 5 years and 9 months ago
I am considering the purchase of a 3-family landmarked building in the Bedford Historic District, near Fulton St. There are a handful of high rise (~10 story) luxury rental buildings opening up this year in the area. How will continued growth in high rise luxury rentals and condos effect the potential rental income of the 3-family? My immediate thought is that it will cause the smaller home rental prices to drop, but is there any way it could have the opposite effect and cause it to rise? Would it stay the same?
Looking to live in one unit and rent out the others to offset some of the costs.
GreenThinker | 5 years and 9 months ago
I would say prices will remain the same for 2-3 unit rentals in older buildings. If the apartments are nicely renovated, there will always be interest. A 1 bedroom luxury apartment on average in 4k a month, plus you have to pay for heat, which is usually electric. A 1 bedroom in a 3 unit building can be anywhere from 2400-3000k a month, heat included. (At least in my area) 3-4 bedroom apartments are a safer bet, cause you’ll always find a millennium that can pay 1100-1200 a month for a bedroom and split the rest of the costs with roommates.
What you really need to do is figure out the math in buying a home in the current market. My house was bought 20 years ago, is paid off; so I don’t worry about rental prices, if it takes a few months to find a tenant(s) I feel comfortable with or if someone will ever decide to stop paying rent completely. But currently, putting 2-2.5 million into a building, to get 7k out of 2 units, while living in 1, is risky business if yo u don’t have a lot of cash in your bank account and a stable well paying job to offset expenses, cause the rental money isn’t going to make you break even.
brokelin | 5 years and 9 months ago
In my experience, there are the type of people who want to live in a brownstone floorthru, and they are usually different from the those who want to live in the newly constructed luxury rentals (though there are obviously some who are indifferent – who are looking at size, location and price alone.) So there will always be those who want to rent your place.
When I went to sell my brownstone coop, I was concerned that buyers would prefer the newly constructed luxury condos for sale nearby. Until I went to look at them – and saw the tight room sizes, the ugly electric heating, and realized that despite the fancier kitchens and bathrooms, I’d rather live in my place, and plenty of others would, too. Which turned out to be true when I put it on the market.
Rentals are a somewhat different market – there will be those who will want to rent in an owner-occupied brownstone. (There will also be those who never want to share a home with their landlords – those who want to play music loud and throw loud parties, for example.) I found that owner occupation meant my prior bro wnstone rentals were better cared for than those that weren’t owner occupied, so I preferred them. But that doesn’t say anything about prices.
It seems to me, though, that whether the nearby luxury rentals rent for more than your place will command (they might, over time – many management companies tend to really maximize the rents with lots of turnover, sometimes deliberately caused by excessive fees and poor maintenance, it seems) isn’t really the issue that matters to you. What you want to know is whether your rentals will have steady, good renters, at prices that will generally go up and not down. That seems likely, given what rents have done in brownstone Brooklyn in the last 40 years that I’m familiar with. But anything could happen in a particular house location due to factors outside of your control.
If you want to maximize your rents, you could also encourage high turnover with poor maintenance and high rent hikes. But many in owner occupied homes seem to balance the rent increases they could get through such behavior with a preference for good tenants who will stay for awhile. When you live in the building, maximization of rent is only one of the factors that needs to be considered for a peaceful life.
hkapstein | 5 years and 9 months ago
I wouldn’t position your units against luxury apts. There is always a demand for affordable rentals. What seems like a small difference to you of say 100 bucks a month, might be a huge difference to many renters. If you live in the building and do your own maintenance, and you offer nice, safe, well maintained apartments, I think you can keep them priced much more affordably than the newer buildings, and folks will come running.
lkrshacmzcy | 5 years and 9 months ago
There are major differences between living in a High Rise rental versus living in a Brownstone rental; the clientel should be different. Through my clients, I have seen a positive correlation between filled luxury apartments (key word: Filled) and their rent being able to increase without frustration.
lkrshacmzcy | 5 years and 9 months ago
There are major differences between living in a High Rise rental versus living in a Brownstone rental; the clientel should be different. Through my clients, I have seen a positive correlation between filled luxury apartments (key word: Filled) and their rent being able to increase without frustration.