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Old 10-16-2018, 03:30 AM
 
105,919 posts, read 107,880,197 times
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Quote:
Originally Posted by artillery77 View Post
Sorry, my response was pretty jerky.

Thanks for the write-up. It's a very interesting dilemma, and makes sense the way you write it up. Tenants won't go, and have a right to be there until they and/or kids pass on. To paraphrase Dr. Strangelove, we have a mine shaft gap.

I guess first call is to the alderman. If there's an entire market on this stuff I'm sure people are interested in making it go away so it's likely fruitless, but you probably already know.

Then you can look for the gotchas, which if you're already offering $100K I'm sure you've done this as well. How much or little you want to help someone towards that gotcha is at your own discretion.

There could also be fees of some sort. They've likely been in an made adjustments to the place. While you might normally not charge for them, you might also normally raise the rents every decade or so...

Why don't you want to sell the interest to someone else though? Someone has kids that are younger. Worst case is it's like a 60 year bond or something. In the meantime, politics change and I'm sure Central Park rent carries an insane premium when free floating. Maybe the kid would be willing to agree to give it up for help with college or something. Kid gets to live their own life and is content that parents will be fine for as long as they live there.

Not sure...it just strikes me really wrong though...like squatter rights or something. Totally fine with you bought knowing rents can't go up, but you're actually going to lose your property. Rent rights override ownership rights? It just seems very wrong. I just don't think I could do it.

At the same time, we've got a rent control initiative on the ballot right now, so what you're saying scares the hell out of me. Oddly enough, I don't raise my rents, but the thought of the government telling me not to makes all the difference in the world. If it passes, my rents are definitely going up.
it really is basic contract law . if a tenant wants to break a lease a landlord can charge them for breaking a contract . on the other hand if i want to break the contract i agreed to with the tenant i have to pay the tenant .

so it goes both ways and i don't begrudge the tenant for it . it is what it is and goes with the deal .


i mean , i think the law sucks and is unfair but then again life is never fair . i have always just learned to play the cards i am dealt and try to profit rather than complain about the hand .

in the mean time the sale of the lease rights ended up being one of the biggest sales of lease rights in nyc real estate history .

this is the building where we had the lease rights and the apartments . ashkenazy developers and acquisition , bought the lease rights for the remaining 20 years from us for 18 million dollars . the leases are on the commercial spaces in the building which bring in millions in rent . when spitzer took the building co-op he retained the commercial lease rights for 50 years and cut the building a deal on the apartments in exchange . a brilliant move on his behalf .

http://www.aacrealty.com/portfolio/2...ral-park-south

Last edited by mathjak107; 10-16-2018 at 03:56 AM..
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Old 10-16-2018, 08:10 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,297 posts, read 8,464,549 times
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Quote:
Originally Posted by mathjak107 View Post
just so everyone understands how these deals work with stabilized apartments i will explain .

because landlords were tricked in to believing that stabilization was only to prevent rent gouging and it instead became a political pawn with many many years of artificially held down rents , many owners took the building co-op .

most co-ops were non evicting conversions . those tenants who did not buy stayed on as stabilized tenants .

anyone living with them was protected too so basically they became part of your family forever if they did not die or move .

the only way to free up the apartment is they move ,die or take a lease buy out . we offered 100k to the tenants to move . since most were close to retirement age and could not afford to live near central park with no pay checks they jumped at it .

then the apartments can be sold or have no rent restrictions anymore .

so depending how old and who lives with the tenant these apartments can be sold and passed around to investors . some go for as little as 30 cents on the dollar .

in the deal we did , we got a 50% stake in 9 apartments ranging in value at the time , 15 years ago from 800k to 2.5 million plus a 10% stake in the commercial lease rights which ended up selling for 18 million dollars, all of which we split with our son who is a partner too , all for 500k . the people we bought out looked at only rent roll and not actual street value since they could not sell them .

how they came up with as little a valuation as they did still escapes us . the lease rights alone were spinning off quite a bit of money by themselves , so yeah luck was a big part of this venture .

we can actually give away those two remaining apartments for free and it would still be a fabulous investment .

in this case if it was not for the 26 year old who has succession rights we would just hold the apartments forever and our kids would win as the tenants would not outlive our kids so the kids would get them and be able to sell them . but with a 26 year old it is a game changer .

the 26 year old is much younger than our kids so it's silly to sit with these . it is found money offering them to the tenants at a greatly reduced price .

but of course the problem is still that the tenants need to be able to afford to buy a 600k apartment . many would not have been tenants since the 1980's if they could afford to have bought .


so basically it is what it is and for all purposes we don't even count the value of the apartments for much . they are pretty much off our yearly net worth review when we do one .

this is why usually investor corporations dabble in these things and not something the public gets involved with . corporations have infinite lifetimes to wait . it is like those companies who buy out structured settlements and then wait .
So you split a profit of 17 million for $500k?
Like the announcer on those Spanish stations when they make a soccer goal.....
Gooooooooooaaaaalll or in your case wiiiiiiiiiiinnnnnneeeeeeeeerrrr!
Definitely beat the Market on that one even with the higher tax you paid.
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Old 10-16-2018, 08:49 AM
 
105,919 posts, read 107,880,197 times
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no , on the lease rights we had a approx,10% share which we split with our son . that alone turned in to an amazing deal . the apartments were a 50% stake which we split with our son .

we are still scratching our head on how their attorneys approved the valuations that they asked for when they told us what they wanted to be bought out .

Last edited by mathjak107; 10-16-2018 at 09:00 AM..
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Old 10-16-2018, 10:02 AM
 
Location: Chicago area
18,750 posts, read 11,725,695 times
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Being a landlord helped me retire at 58. We've had one rental for over 25 years and it never had a mortgage. One property was only financed for six years, and another, only six months. If you can run them debt free, the money comes in really fast. Then you can pay cash for another property. The money snowballs if you're good at managing people. If you're not good at rehab and aren't willing to get your hands dirty, I would think twice about investing in income properties. The profit margin can be thin if you don't buy right, rent to the right people, and have to hire people to do the dirty work. Yes it was a lot of hard work. There were months with one or two days off for the entire month. There were naps in the truck after working night shifts and going out to a rental after work because it was vacant. When it's good, it's great, when it's bad, it's a nightmare.
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Old 10-16-2018, 11:43 AM
 
Location: Was Midvalley Oregon; Now Eastside Seattle area
12,997 posts, read 7,371,740 times
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In the stocks and bond world, you watch the Market and your's change daily if not by the minute.
In the rental market, the values change only when someone asks which why I rely on Zestimates and it's estimate
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Old 10-16-2018, 02:02 PM
 
Location: Silicon Valley
7,618 posts, read 4,524,281 times
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Where are these types of things bought and sold? 50% return on 60 years certainly doesn't sound great, but it would be tax free given a stepped up basis and there's always the chance that politics could change and property continues to appreciate.



Do you have the right to move in and live there yourself?
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Old 10-16-2018, 02:16 PM
 
105,919 posts, read 107,880,197 times
Reputation: 79508
Quote:
Originally Posted by artillery77 View Post
Where are these types of things bought and sold? 50% return on 60 years certainly doesn't sound great, but it would be tax free given a stepped up basis and there's always the chance that politics could change and property continues to appreciate.

Do you have the right to move in and live there yourself?
60 years ? not sure what you are referring to .

as far as can you occupy it yourself ? depends .

if in personal name and the occupant is under 62 then yes , you have to move in for 3 years .

but if in the name of an LLC it is a lot more complicated and of course whoever takes it would have to buy out the others . none of us ever wanted to live there regardless as it is far to costly and you can't really own a car or it is a fortune to park and we need a car to see all our kids . .

if an owner wants to take over an apartment occupied by a tenant — or the tenant’s spouse — who is disabled or 62 or older, the landlord must provide an equal replacement apartment in the immediate area at the same rental terms as the stabilized rent. you can forget about that ever happening . rents would be 4-5k in that area in an equal replacement . .

an owner can evict a stabilized tenant only after the current lease expires, and provided he gives written notice of nonrenewal 90 to 150 days before the expiration. owners must actually use the recaptured apartments as their (or their family members’) primary residence for at least three years or penalties can be imposed, including possible triple damages to a wrongly evicted tenant.
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Old 10-16-2018, 04:16 PM
 
28,107 posts, read 63,440,395 times
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Plus there are always ballot measures on the Horizon and few are neutral or favor property rights...

Several in my city are again take away from private property...

One is to address Homelessness which says any vacant property is subject to a city vacancy tax up to $6000 per year per unit.

Another targents owner occupied property with Granny Unit or second up to three total units by imposing rent control which already covers 95% of the city rental stock and evictions are less than 1% and mostly for non-payment...

Just things to think about in that Real Estate is stationary...

Oakland Measure W and Measure Y
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Old 10-19-2018, 12:08 AM
 
Location: Silicon Valley
7,618 posts, read 4,524,281 times
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Quote:
Originally Posted by mathjak107 View Post
60 years ? not sure what you are referring to .

as far as can you occupy it yourself ? depends .

if in personal name and the occupant is under 62 then yes , you have to move in for 3 years .

but if in the name of an LLC it is a lot more complicated and of course whoever takes it would have to buy out the others . none of us ever wanted to live there regardless as it is far to costly and you can't really own a car or it is a fortune to park and we need a car to see all our kids . .

if an owner wants to take over an apartment occupied by a tenant — or the tenant’s spouse — who is disabled or 62 or older, the landlord must provide an equal replacement apartment in the immediate area at the same rental terms as the stabilized rent. you can forget about that ever happening . rents would be 4-5k in that area in an equal replacement . .

an owner can evict a stabilized tenant only after the current lease expires, and provided he gives written notice of nonrenewal 90 to 150 days before the expiration. owners must actually use the recaptured apartments as their (or their family members’) primary residence for at least three years or penalties can be imposed, including possible triple damages to a wrongly evicted tenant.

Can't rep again unfortunately.


60 years is a 26 year old plus 60 more years of life.



50% in 4 years is much better.



So you find the trusted family member that is going to live there. If it is an allowed family member, you can do this direct. If it is a disallowed but trusted member, perhaps make a teaser loan to the trusted member. AFR rates for the first four years to avoid gift taxes. The trusted member then acquires the property from your co-op and begins eviction notification timely.



They take over the property and live there, in their own property for three years. After year 3, they default on the loan to you (or your LLC) and you foreclose upon the property. Just to make sure they do it, have the teaser rate go from AFR rate to the maximum allowed by statute in NY. Do not allow for early payment. Even if they don't move then, you're making double digit interest on a big chunk of cash.



Might be perfect for say....someone looking to spend four years at NYU?
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Old 10-19-2018, 02:12 AM
 
105,919 posts, read 107,880,197 times
Reputation: 79508
nice scheme but sorry to say that would not work for many reasons . the stabilization laws are smarter and more complex than was discussed here.

tenants are also protected if your rental building went co-op or condo with what's known as a "non-eviction plan." In this case, an investor who buys your unit can't claim owner use to get you out.The idea behind a non-eviction conversion is that no one should be evicted because they decided not to purchase"

if the building is not a co-op , which of course ours is then there are a few reasons your plan would not work once again . .

if the tenants are below market odds are they are there a long time so if they are over 62 OR IN THE BUILDING MORE THAN 20 YEARS,all bets are off the table . unless the building was going to be demolished or gutted out you are stuck with them .

but the main reason this won't work is , in the case of business's owning the apartments as an LLC or corporation ,you can't take apartments for family or youself .

when held in personal name you can have family members , but , while the Supreme Court may think that 'corporations are people,' the rent-stabilization code doesn't believe that LLCs or corporations can have family members,"

As such, if you live in a large building with an elevator, an "owner-use" eviction probably isn't going to hold up in court, as the building is likely owned by an LLC or large corporation.

taking an apartment works when you have a small building ,say 6-10 apartments held in personal name . but then i think anyone holding a business with 6-10 tenants in personal name and not LLC or corporation is taking a big risk .

so you can see it is not as easy as lets take the apartments by dreaming up a scheme .

many areas the have these stabilized multi family brownstones with say 6-10 apartments , which were taken over and converted to multi million dollar 1 family buildings , so that worked well .

Last edited by mathjak107; 10-19-2018 at 02:35 AM..
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