Landlords are denying prospective tenants who meet income, employment and credit requirements for units due to savings (lease, condo)
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We all know renters are the majority in NYC, only about 1/3 of NYers are homeowners. It will be up to the courts to once again enforce property rights, but it won't happen quickly.
Boro | % Owner occupied
MN | 23.96%
BK | 30.56%
QNS | 45.29%
BX | 18.46%
SI | 69.20% NYC TOTAL | 32.75%
NYC EXCLUDING MANHATTAN TOTAL | 35.47%
Landlord perspective: To buy a property (especially in this market) a buyer needs at least 15% of the purchase price available (to include down payment and closing cost).
So right off the bat many are spending $80K to $200K just to acquire a property.
The banks require 6 months reserve of mortgage payments. That is another $25K.
If you have to fix anything you are spending $20K to $100K if it needs to be done properly with permits.
Documents/requirements to buy a house:
Decent credit. You are super shaky if you are below 650. Keep your score above 740 and you will get the best interest rate. Better interest rate means a lower monthly payment.
Monthly banks statements for 3 months before the mortgage application and every month until you close on the house.
Your paystub every 2 weeks.
Last 2 years tax return
Child support payment proof
Alimony document if you have ever been divorced
Credit check every week.
Retirement account statement
The bank requires the buyer to have a debt to income ratio of no more than 40% (30% preferred). This means your monthly debt/bills can not be more than 40% of your income.
Now after jumping through all the above hoops, You have to find property and seller to accept your offer and beat out the higher offers/cash buyers.
Once your offer is accepted and you pass the bank you have to spend money on:
Appraisal, inspections, insurance etc.
Once you own the house NYC raises your taxes as they see fit because all those free stuff cost and tax revenue pays for them.
So after going through all of that, politicians and some tenant think that it is perfectly fine for them move into a property, not be asked if they can afford it, have a track record of late payment and non payment. Be allowed to stay for a year to 3 years (pandemic) without payment. Be allowed to destroy a property. Move out without paying for such damage. And the list goes on.
They even try to tell landlords in housing court to open utilities in their name because the tenants have ruined their credit and not paid their own utility and no friend or family wants to help them out.
Well then good luck seeing 4-6 months worth in the bank
That is what the banks require to buy. The property owner must have that. So they have just decided to make sure the same requirements are passed down to the tenants. Minimizing risk.
I have an account with 12 months emergency funds. I know it is too much now. So I am thinking about what to do with the excess. I don't want to deploy it in the stock market until I can figure out what is going on with Russia. My oil, gas and tech stocks are doing fine. The rest not so much.
Many landlords are going to completely exit the rental market after this experience during the pandemic.
The big investors /REITS who are gobbling up many of the rental/housing will have unlimited funds to keep apartments empty and hike the price of the ones that rent.
They also operate their business differently.
They rent hikes are without failure every end of lease and the fees they charge are insane.
That is what the banks require to buy. The property owner must have that. So they have just decided to make sure the same requirements are passed down to the tenants. Minimizing risk.
I have an account with 12 months emergency funds. I know it is too much now. So I am thinking about what to do with the excess. I don't want to deploy it in the stock market until I can figure out what is going on with Russia. My oil, gas and tech stocks are doing fine. The rest not so much.
Many landlords are going to completely exit the rental market after this experience during the pandemic.
The big investors /REITS who are gobbling up many of the rental/housing will have unlimited funds to keep apartments empty and hike the price of the ones that rent.
They also operate their business differently.
They rent hikes are without failure every end of lease and the fees they charge are insane.
The banks require that to buy, because its their money being borrowed.
Ultimately the business model is being changed. A LL that owns 6 units or less in NYC is no different than a yellow cab driver. Way of the dinosaur. If you owned 100 units, or owned luxury apartments for rent, this wouldn't even be a conversation topic.
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"The man who sleeps on the floor, can never fall out of bed." -Martin Lawrence
I have 12 months emergency funds. I have an apartment empty for the last 5 months. I listed it 2 months ago. My standards are strict and I won't budge.
I would rather have an empty apartment rather than a bad tenant. I have no problem paying my mortgage myself. What I wont do is pay to house an irresponsible tenant who doesn't pay on time, not pay and damages my property.
My other tenants are amazing. They pay on time or early and keep their apartments in amazing shape.
I just bought another property. One tenant has been living there for over 8 years. I will renovate her kitchen and raise her rent slightly. It was atleast $600 under market value.
The other tenant was rude and uncooperative when were were buying. Paid rent late and had a missed payment one of the months. Everyone in the house was employed.
Their rent is also cheap. Guess who is getting the boot? We will renovate that apartment and rent it at substantially higher market rent.
I have 12 months emergency funds. I have an apartment empty for the last 5 months. I listed it 2 months ago. My standards are strict and I won't budge.
I would rather have an empty apartment rather than a bad tenant. I have no problem paying my mortgage myself. What I wont do is pay to house an irresponsible tenant who doesn't pay on time, not pay and damages my property.
My other tenants are amazing. They pay on time or early and keep their apartments in amazing shape.
I just bought another property. One tenant has been living there for over 8 years. I will renovate her kitchen and raise her rent slightly. It was atleast $600 under market value.
The other tenant was rude and uncooperative when were were buying. Paid rent late and had a missed payment one of the months. Everyone in the house was employed.
Their rent is also cheap. Guess who is getting the boot? We will renovate that apartment and rent it at substantially higher market rent.
You deserve a round of applause for the bolded
At least you have some sort of business acumen
Most LLs can't afford to carry the mortgage on their own, even worse, they live on the same property as the tenants
__________________
"The man who sleeps on the floor, can never fall out of bed." -Martin Lawrence
The banks require that to buy, because its their money being borrowed.
Ultimately the business model is being changed. A LL that owns 6 units or less in NYC is no different than a yellow cab driver. Way of the dinosaur. If you owned 100 units, or owned luxury apartments for rent, this wouldn't even be a conversation topic.
When you rent to a tenant you are giving them your money in effect by giving them your property…
At least the bank has a property lien …you as a landlord have nothing of equal value from that tenant.
Most rentals in nyc are multi story buildings at least 5 family so most landlords are usually not the small guy with limited resources.
More than half of all rentals are stabilized and that means five family or more
The banks require that to buy, because its their money being borrowed.
Ultimately the business model is being changed. A LL that owns 6 units or less in NYC is no different than a yellow cab driver. Way of the dinosaur. If you owned 100 units, or owned luxury apartments for rent, this wouldn't even be a conversation topic.
I have seen luxury apartments. I can proudly say my apartments are much better (unless the building has a pool). I use top quality materials in my apartments. And I renovate them because I truly love renovating properties. That is my passion. I make pittance as a landlord compared to what I earn when I renovate and sell a house.
Our W2s are also substantial enough. So we are not personally hurting for money. I can afford to have the standards that I have.
I personally know 3 people who own hundreds of units. They too are tightening up their requirements. One I am trying to buy a 10 unit building from. It has been empty for over 4 years. At this point they don't even care.
Everyone is tightening up their requirements.
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