Rental apt: to broker or not?
We are the soon-to-be owners of a 2-family, and will be renting our top floor apartment out, living in the bottom floor.
We have a well-developed aversion to brokers and we are pretty DIY (FSBO’d our last place very successfully & didn’t use a broker to buy this place). But I am finding myself a little hesitant to DIY in the world of rentals/tenants because I feel there are a lot of unknown unknowns about laws, how to find good tenants and ensure they’re good tenants, how to “turn” an apartment quickly in the case of a vacancy, etc.
At the same time, I’m loathe to make future tenants pay a prohibitively expensive fee, when moving is already such a hassle! And I’d rather avoid profiting the real estate industrial complex any more than I already do.
So, are there compelling reasons, despite all that, to use a broker?
If no, are there any DIY resources about being a good landlord and finding good tenants that you might recommend, including an overview of salient laws/areas of responsibility?
( The building is in Prospect Heights, west of Vanderbilt. A 1.5BR floor through with all amenities and the price will be in the range of $2500-$2800, if this affects what recommendation you would make re: broker!)
notfromny
in General Discussion 8 years ago
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16 replies
curiositykilledthecat | 7 years and 11 months ago
Update as promised. We found a great, well-qualified tenant days after my comments here. Our best guess is a slight timing issue (we assumed summer would be a more busy for those looking) paired with a slight softening in the market to favor tenants. And this happened before signing with a broker, so no fees required of our new tenant.
And after many years of steeply increasing rents, I say good for the tenants out there getting a break. We’re all neighbors, after all.
peaceout | 8 years ago
The market had drastically changed over the past 3 years. There’s a glut of apartments, and the reach where tenants are willing to look has increased to outside areas other than brownstone Brooklyn. Gone are the days where walk up apts, no dish washer, no washer dryer, pine sub floors are things tenants don’t care about.
Some landlords prefer renting on their own, and that’s fine. Others prefer working with agents, since not everyone can be available to show continuously throughout the day/night/week. More and more agents are not asking for 15% commission, as they are just as anxious to rent the apt as the landlord. No one wants to endlessly show apartments, run credit checks without any results.
curiositykilledthecat | 8 years ago
Thanks for these details, Reno–very helpful. Your points are well taken. We haven’t had a vacancy in 7 years (!) and can’t seem to figure out the market, especially on a sample size of 1.
Our thinking on the broker is 3-fold: (1) it is truly easier on the landlord at least for showings, especially with the number of no-shows we are getting. (2) we need to change something on our approach, and honestly aren’t convinced that price is the problem. We priced mid-market for the size and neighborhood, even though quality and extras would justify higher end. Then we dropped the ask by $200 without any change in action. We are three weeks in and only 7 viewings (and an equal number of no-shows/last minute cancels). (3) we’ve never used a broker so let’s just learn from the experience
Will be glad to update this thread as we progress.
renoishard2 | 8 years ago
Last tenant was $x (about $3,000). I first listed it at +$100. 1st cut was back to $x. 2nd cut was $x-$100. Just got it rented via CL on a 2-year lease. Seem like goo tenants.
I would rec you list on Streeteasy before doing anything else. I just literally now found out I had a weird problem with my email accounts that started around the time I listed with Streeteasy. It looks like I had many legit-seeming inquiries via Streeteasy. I think its probably the most useful for tenants, and therefore landlords. I know I like to use it when looking at properties to buy. I bet I could have rented it for $x or +$100 if I had listed on SE on Day 1. You live and learn.
The $140 would’ve been a good investment. Much better than NY Times. And I wish CL would charge something to list, to stop the listing spammers.
Pls let us know how your situation ends up.
notfromny | 8 years ago
Thanks @renoishard. Very helpful as we think about pricing. I have the sense that it’s more of a renter’s market, too, and we’ll be renting this apartment for less than it was previously rented for.
Do you mind letting me know how much you had to decrease rent each time to see an increase in responses? Could be very helpful for my as I think about our own listing!
renoishard2 | 8 years ago
To curiousity: I think its just become more of a renters market.
I just rented out an apt. It was on the market for 7 weeks and I had to drop price twice (initial was higher than prior tenant). Over the last 7 years, I had always raised rent and let it out almost immediately (I always priced it right in middle of comps). No inquiries at first price, some after 1st cut, and multiple good applicants after 2nd cut.
What good do you think a RE broker is going to do? Assume you get an “average” broker, not some superstar who is going to work his/her ass for your listing (pls no replies from brokers who act like every RE broker gives 120% to every listing). They can’t make it a landlord’s market. Very tiny chance he / she can convince a renter to pay $200 / month more than the comps would indicate. But high chance he / she will tell you to ask for a high rent and let it sit un-rented for months on end because if / when a tenant signs, they get a bigger commission. They don’t lose anything from an extra month(s) of being un-rented.
When I look at comps, I see many apts asking super or kind of high prices that seem to have been sitting on the listings for months. Such stale listings always have brokers and are never “By Owner”. Coincidence?
curiositykilledthecat | 8 years ago
We have always found tenants on our own (20+ years) for all the reasons outlined above. This time, though, we’ve had a surprisingly difficult time finding tenants and are considering using a broker.
Craigslist has been devolving for years, but at this point our posts are flagged and removed within hours of posting. And StreetEasy generates a lot of interest from people who make appointments but don’t show.
All said, much to my own surprise, we are considering signing with a broker.
boredatwork | 8 years ago
I rent the floor-through garden apartment in my home and have always used a broker. I follow the same process as @mozeeatupa. The broker does all of the screening and checks, and only brings tenants to me who pass the screening and will likely be a good fit for the apartment and us. We make the final choice.
I find that if a tenant pays a fee, they are more likely to want to stay longer to amortize that investment. Frankly, my goal is to find a good tenant who will pay on time. And if a broker can eliminate 90% of my work, its worth it to me, and doesn’t cost me a cent. Saving the tenant money is not really in my calculation.
NeoGrec | 8 years ago
In the past, we always rented our garden apt directly but last time we used a broker and ended up with our worst tenant ever. Far from a disaster but certainly way less good than everyone previously. Could have been a coincidence but we will return to handling it ourselves next time. And maybe the crazy broker’s fee makes people more entitled and less concerned about basic considerations of living in the same building — who knows?
slopefarm | 8 years ago
We rent out the ground floor of our 2-fam. We have never used a broker. I find we learn so much just by observing the prospective tenant look at the apartment, the questions they ask, etc. A casual conversation, what are you looking for, why are you moving, etc. When you see everyone, you have the ability to choose. A broker just puts one forward. Just be familiar with the basic legalities — required disclosures (lead form, etc), non-discrimination, etc. Also, it is nice to save the tenant the fee.
renoishard2 | 8 years ago
I also have tenants in the building I live in. I find, screen and choose my own tenants. I can’t imagine I’d want a broker to do that for me. They want the commission, what do they care if the tenant is really the best fit to be living above or below your family? Please check out my post about listing websites from a few days ago. Craigslist keeps working well for me; got many good applicants over the years from CL and never had a bad applicant actually. None of the paid ones produce any results.
The standard leases available online are ok but I think you should a get lawyer to tighten them up (in favor of the LL). And I add a bunch of additional things. Key for me is: airbnb by the tenant or any other short-term renting, subletting or house-swapping is strictly prohibited.
Good luck!
Arkady | 8 years ago
I use CL because I want to meet the prospective tenants. I have a questionnaire for interested people that asks for employer’s phone, prior landlord, etc. & I check those & also run a credit check. I use a standard Blumberg lease w/ one written in rider saying tenant is responsible for compliance w/ NYC rubbish & recycling laws. No problems in over 20 years.
mozeeatupu | 8 years ago
I have a broker do the initial screening, then I pick the tenant from their finalist. I also require proof of rent payments for the previous year
deva | 8 years ago
I dont broker — much better control on how you the process works and who you select. Of course if this is the first time, it might be worth getting a top experienced broker but even then, there is a ton of resources online….
dmdesmond | 8 years ago
Brokers are terrible but you need to have a really good understanding of tenants rights in NY, which are strong. The important thing is knowing how to handle things if you want them to get out. If you screw up there , you could be out a few months rent while they have you in housing court and end up with a trashed apt.
Maybe get a real estate attorney to check lease docs for you and consult with on liability, someone you can email when you have a situation. An attorney can advise you on what you should check for before you rent but definitely run a credit check and see if they have sued anyone before.
I appreciate you not using a broker. Most of them, while nice, have no business charging what they do. It is ludicrous.
xchx | 8 years ago
I wouldn’t trust a broker to figure out who’s going to be a good tenant. Make sure you check they really are employed, maybe ask to talk with their last landlord. Maybe search their name to see if they’ve been involved in lawsuits if you want to be really diligent?
I got a great response to an ad on Craiglist, just scheduled one open house and had the place rented within a couple days. Also posted on Streeteasy but I don’t think that was necessary.
You will need to make up a lease, you can find generic ones online or the lawyer who did your purchase might be willing to do it cheap.