Has Manhattan Real Estate Appreciation Value MAXED OUT??? (mortgage, house)

[mathjak107]

Originally Posted by A_Better_Bronx_2morrow

No one has a "right" to rent control. If you can't afford to pay the rent, then live somewhere else. I can't afford to eat lobster. I don't go into a restaurant and demand price control on lobster. I choose a lower priced item.

This country has such an entitlement mentality.

You are only entitled to Life, Liberty, and the PURSUIT of Happiness. Notice that it doesn't say the ACQUISITION of happiness. Only the PURSUIT of it.

No one is calling for the poor to be put out on the streets. But we also don't have the right to demand of a single person (a Landlord) to SUBSIDISE what other people want.

If New York voters want ARTIFICAL low rents, then let the voters pay a tax and send that tax to the Landlords to make up the difference between what he would get in rent on the open market and what he currently gets under rent control laws.

That would be the FAIR and RIGHT thing to do.

Ah, but we're not talking fair...we're talking about voters who want to do "good" for the poor, but want SOMEONE ELSE to make the sacrifice.

Like I said before, if a lack of housing is a PUBLIC problem, use PUBLIC money to fix it (tax payer money) even if the City has to increase the tax 1% or 2% to cover the new expense. Then so be it.

DON'T use PRIVATE money out of the landlord's pockets to fix a PUBLIC problem. And the Rent Stabilization Law does just that. It FORCES landlords to do so. They have no choice.

In reality, us landlords are actually subsidising the diifferance on the Tenant's behave. So the landlord is acting as a CHARITY. Now how is that FAIR to landlords?

Yet the nerve of all these Pro-rent stabilization, Tenant advocates bashing landlords, smearing our image and saying ALL landlords are GREEDY. When they don't even know what REALLY goes on and how unfairly we get treated.

lets add a few more i saw

you do not have a right to free food or free or subsidized housing. americans are the most charitable people on the planet but we are all tired of all the people who dont work and dont contribute and just keep cranking out generations of people who dont work or conribute

you dont have the right never to be offended. freedom is about others opinions not just yours. leave the room, change the channel or read something else if it bothers you

you dont have the right to be free from harm. if you stick a tool in your eye its not your right to be made wealthy or rich by the manufacturer because your an idiot

[quelinda]

Originally Posted by mathjak107

its not just about expenses for the month its about total return at the end of the year. its also about repairs,renovations ,maintaince and property appreciation or now depriciation and legal fees ,accounting fees etc . its all about ROI or return on investment and how it compares to other asset classes with less grief,less risk and greater return.

a building may be profitable but if its surpassed by a treasury bond then its a poor investment

its like why work for someone paying you 1/3 of what you can earn from a competitor across the street assuming they treat you the same or better.

I know you keep going back to this point and I'm thinking its more the luck of the draw than anything. Meaning how much income your particular building is generating in relation to how much you paid for it. You make out well when you hit an up and coming neighborhood so your rents jack up over the years following the purchase. That means you got the place cheap and now you've sort of hit a windfall. That is exactly what happened in the late 1980's and early 1990's, when my Dad got into the upper west side as it was still somewhat dicey and prices were cheap around the city generally. He bought the buildings cheap and the rents have gone up significantly so that he can comfortably retire just off the building income alone and live rent free on two floors with a backyard. While he owed money, the interest sheltered his work income. However, had he bought 2 years ago he'd obviously be in the hole right now..

[SeventhFloor]

Originally Posted by A_Better_Bronx_2morrow

My building is located in the Norwood section of the Bronx by Montefiore Hospital. It's a 50 unit building.

Market rent for my area is:

1 Bedroom= $1,000-$1,100
2 Bedroom= $1,200-$1,300
3 Bedroom= $1,500-$1,680

My monthly rent roll if every tenant pays is about 34K a month.

You do the math and tell me if 34K for a 50 unit building is a sign of a successful business. Thats less than $1,000 per unit!!!!

80K a year in oil expenses
67K a year in property tax
36K a year in Water & Sewage
32K a year in Building Insurance
90K a year in salary (me and my wife only) We both have low salaries despite being owners...can't afford to give ourselves a raise.
21K a year in City & State taxes
Over 100K in Apt. renovations and maintanance



Someone living in the other 4 boroughs are looking at these market rents in the Bronx and thinking to themselves how cheap rent is in the Bronx...lol

ok...so if every tenant pays the rent roll is $34,000 a month.

thats $408,000 a year.
minus 80K for your oil is $328,000.
minus 67K for property tax is $261,000
minus 36K for water/sewage is $225,000
minus 21K for city/state tax is $204,000 you have left over.

but 1 thing that confuses me is how are you paying $100,000 a year in renovations? and i'm sure you looked into converting to gas....how much is that? or solar panels? i know for a single family home it runs about 40-60K for a 50 unit building i dont know.

[mathjak107]

Originally Posted by quelinda

I know you keep going back to this point and I'm thinking its more the luck of the draw than anything. Meaning how much income your particular building is generating in relation to how much you paid for it. You make out well when you hit an up and coming neighborhood so your rents jack up over the years following the purchase. That means you got the place cheap and now you've sort of hit a windfall. That is exactly what happened in the late 1980's and early 1990's, when my Dad got into the upper west side as it was still somewhat dicey and prices were cheap around the city generally. He bought the buildings cheap and the rents have gone up significantly so that he can comfortably retire just off the building income alone and live rent free on two floors with a backyard. While he owed money, the interest sheltered his work income. However, had he bought 2 years ago he'd obviously be in the hole right now..

the interest shelters noooooooo work income, your spending an extra 3 bucks to get back 1... thats no shelter.thats like paying the doctor 900 bucks and going great i can get back 300 ,what a great tax shelter i found... a shelter is where you spend nothing extra and pay less taxes.. spending the extra dough and writing off a portion is just a plain old fashioned loss

your reason above is exactly why i dont buy rental buildings, only co-ops that may have rent stabilized tenents.. then i speculate that i may outlive their existance in my apartment and sell it...

notice i said speculate, i dont consider doing this investing

even if you found the next park slope your building cant go up in rent more then the guidlines if its a rental. thats what happened to our central park apartments where rents should be 5,000 a month and our highest tenant pays 2500.00


how wonderful it would be if we could only jack up the rents to market value as the area got better. thats the whole point,you can't.. you can only go the 2 or 3% the guidelines allow unless your tenants turnover at a fairly fast rate... if you bought the place cheap because the area muliplier was smaller the rents are still subject to the same guidines so unless your expenses drop your income is limited to the guidline increases... only time you benefit is if you sell if the area is hot and even that can be curtailed if the rent roll remaiins low because you dont have a big tenant turnover.

unfourtunetly i think you have bits and pieces of what you pick up from dad but theres alot of the puzzle pieces your missing

buying a building with guidelines is like buying any other business you do your home work you crunch the numbers and then you pray things go your way

also dont confuse the fact that you bought a building cheap with average return. its like saying your making amazing money today for what you do because your making 50,000 a year and when you started working you made 12,000 20 years ago.. you may be grossly underpaid today but in your analogy you arent even though you should be earning 100k for what you do

[mathjak107]

ill see if i can explain it as it gets tricky.

when you buy a home its based on price and location. to know if your getting a good deal is easy just look at equivelent homes that are similiar.

rental is complex, its based on the paying rent roll x a location multiplier of anywhere from 1 to 12x the rent roll that takes into consideration how hot the area is. allso you look at what the expenses are.

you can take a building in a not so good area with alot of old time tenents and that rent roll sucks and the area sucks.. that may be a cheap deal price wise at 1 or 2x rent roll but you will see little change in the location muliplier and the rent is 2 or 3% a year by guidelines... to me a crappy deal


lets take a building like where i live in bayside...

very high rent roll due to high income tenants being decontrolled, high turn over so rents are almost market and a whopper of a hot area with a multiplier of 10x rent roll. also to me crappy

but find a building in our area with older rent stabilized tenants and low turnover and you have a low rent roll with a high location multiplier.... now we got crappy income for now as rents low but your hoping on tenants moving, dying etc and the apartments going over 2,000 a month and being decontrolled .

not a bad deal to me.....

or you can get a high rent roll low location muliplier and hope the area gets better and your multiplier goes up. that set up has no bearing on current income and future rent is 2 to 3% but if it reaches decontrolled level or high turnover eventually you can get a winner if you sell

[A_Better_Bronx_2morrow]

Originally Posted by SeventhFloor

ok...so if every tenant pays the rent roll is $34,000 a month.

thats $408,000 a year.
minus 80K for your oil is $328,000.
minus 67K for property tax is $261,000
minus 36K for water/sewage is $225,000
minus 21K for city/state tax is $204,000 you have left over.

but 1 thing that confuses me is how are you paying $100,000 a year in renovations? and i'm sure you looked into converting to gas....how much is that? or solar panels? i know for a single family home it runs about 40-60K for a 50 unit building i dont know.

Are you trying to be slick SEVENTH??? Why did you forget to add the salaries of 90K a year to your reply? Your math is wrong...I do not have $204K left over, though I wish I had, then you wouldn't see me complianing in this forum. Do the math again buddy.

Are you trying to paint a picture that 50K a year for myself and 40K a year for my wife is too much money for an OWNER OF A BUSINESS to make? Cause thats what it sounds like.

50K is not alot of money especially for an owner of a business. You have regular employees making way more than that. And they don't own crap.

Why 100K in renovations? Well in order for me to get an old apartment up to market rent status and increase my rent roll, I have to invest tens of thousands of $$$ to JUSTIFY the increase.

We do a COMPLETE renovation of the apartment...gutter out ALL the walls, all new plumbing, new bathroom, new kitchen, new electrical, etc.

BTW...theres other expenses as well that I didnt bother to mention such as health insurance, gas and electricity, legal fees, loan payments, office/admin cost, business credit card payments to name a few.

[SeventhFloor]

i purposely left out the salary. no deceit intended. i wanted to see how much was left over for you after the expenses you listed. and my math is correct with the numbers you gave me. if you had more expenses, then list them. i was actually just trying to see what kind of position you were in so that i could understand your argument.

[SeventhFloor]

Originally Posted by mathjak107

ill see if i can explain it as it gets tricky.

when you buy a home its based on price and location. to know if your getting a good deal is easy just look at equivelent homes that are similiar.

rental is complex, its based on the paying rent roll x a location multiplier of anywhere from 1 to 12x the rent roll that takes into consideration how hot the area is. allso you look at what the expenses are.

you can take a building in a not so good area with alot of old time tenents and that rent roll sucks and the area sucks.. that may be a cheap deal price wise at 1 or 2x rent roll but you will see little change in the location muliplier and the rent is 2 or 3% a year by guidelines... to me a crappy deal


lets take a building like where i live in bayside...

very high rent roll due to high income tenants being decontrolled, high turn over so rents are almost market and a whopper of a hot area with a multiplier of 10x rent roll. also to me crappy

but find a building in our area with older rent stabilized tenants and low turnover and you have a low rent roll with a high location multiplier.... now we got crappy income for now as rents low but your hoping on tenants moving, dying etc and the apartments going over 2,000 a month and being decontrolled .

not a bad deal to me.....

or you can get a high rent roll low location muliplier and hope the area gets better and your multiplier goes up. that set up has no bearing on current income and future rent is 2 to 3% but if it reaches decontrolled level or high turnover eventually you can get a winner if you sell

who determines this "location multiplier"?

[quelinda]

Originally Posted by mathjak107

the interest shelters noooooooo work income, your spending an extra 3 bucks to get back 1... Thats no shelter.thats like paying the doctor 900 bucks and going great i can get back 300 ,what a great tax shelter i found... A shelter is where you spend nothing extra and pay less taxes.. Spending the extra dough and writing off a portion is just a plain old fashioned loss

you fail to think in the long-term. I used "shelter" as a verb not as a tax free mechanism. Obviously if you get to deduct interest on property that you will eventually own, then that means you bought the property for x dollars (money saved on taxes) less than it was worth. That's called "free money" in my book.

your reason above is exactly why i dont buy rental buildings, only co-ops that may have rent stabilized tenents.. Then i speculate that i may outlive their existance in my apartment and sell it...

Notice i said speculate, i dont consider doing this investing

your first problem is that you believe all apartments in nyc are rent controlled or stabilized. The number seems to be rather small as compared to total units available in the city.

even if you found the next park slope your building cant go up in rent more then the guidlines if its a rental. Thats what happened to our central park apartments where rents should be 5,000 a month and our highest tenant pays 2500.00

see above. Find a property without a bunch of burdensome tenants or grow your family and install your kids there for a few years. Most of our apartments are no longer rent stabilized so we are able to get very high rents.

how wonderful it would be if we could only jack up the rents to market value as the area got better. Thats the whole point,you can't.. You can only go the 2 or 3% the guidelines allow unless your tenants turnover at a fairly fast rate... If you bought the place cheap because the area muliplier was smaller the rents are still subject to the same guidines so unless your expenses drop your income is limited to the guidline increases... Only time you benefit is if you sell if the area is hot and even that can be curtailed if the rent roll remaiins low because you dont have a big tenant turnover.

see above. The buildings were bought cheap not solely because of the rent roll but because very pricey neighborhoods in the upper west side at one time were considered "bad" areas. Also, when you buy when housing prices are plummeting, you may make it in the long run. Apparently the late 80's to mid 90's was a good time to buy.

unfourtunetly i think you have bits and pieces of what you pick up from dad but theres alot of the puzzle pieces your missing

buying a building with guidelines is like buying any other business you do your home work you crunch the numbers and then you pray things go your way

that's what i meant by luck of the draw. You've got to get in at the right time or you could be in trouble.

also dont confuse the fact that you bought a building cheap with average return. Its like saying your making amazing money today for what you do because your making 50,000 a year and when you started working you made 12,000 20 years ago.. You may be grossly underpaid today but in your analogy you arent even though you should be earning 100k for what you do

actually the buildings throw off more than $100k in annual income for practically no work at all. this is a great retirement income if i ever heard of one (on top of pension, 401k and other investments). So no, you wont end up a millionaire on this model but living rent free and earning a great income for doing practically nothing is a good goal for retirement (and prior, depending on the timing). Point is, if it takes you 20 years to have a retirement income, what is wrong with that as long as you're not really losing money along the way.

And had he sold in the last few years, he would have earned over $2.5 to $3 million on a $300,000 investment made 18 years ago. Not a bad return imho.

[A_Better_Bronx_2morrow]

Originally Posted by SeventhFloor

i purposely left out the salary. no deceit intended. i wanted to see how much was left over for you after the expenses you listed. and my math is correct with the numbers you gave me. if you had more expenses, then list them. i was actually just trying to see what kind of position you were in so that i could understand your argument.

I really don't want to put all my business out there but I'm sure everyone gets the picture that landlords suffer through a hardship under the rent stabilization law.

BTW...the rent roll reflecs IF ALL TENANTS PAY. And thats NEVER the case so technically the real rent roll is lower.