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Does anyone have any personal experience purchasing a rent-stabilized Co-op in NYC with a tenant already in place?
My understanding is that generally the purchaser would have to continue renting out the apartment to the current tenant at rent-stabilized rates until the tenant passes away or leaves voluntarily. I'm not that clear on the following scenarios:
If the purchaser wanted to move an immediate family member (parent or sibling) into the apartment, how soon could the owner take possession of the apartment (if at all)?
If the purchaser decides to let the tenant live out their natural life in the apartment, would that tenant's family still have succession rights? Would the owner be required to continue renting the apartment at below market rates to the tenant's successor? Or could the owner then take complete possession of the unit?
When we have a specific unit in mind, we will of course contact an attorney. However, at this point I'm just interested in whether anyone on this forum has had any personal experiences or insight that they could share. There seems to be a lot of conflicting/vague information out there.
i owned quite a few co-ops in nyc with original rent stabilized tenants and still do. that was my thing when it came to real estate investing . but i never had intentions of living there so we buy out the leases for 100k and sell the apartments since they over look central park.
an owner may take back rent-stabilized apartments for his own use or for the use of an immediate family member.
But, , 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. if the tenant is in the building 20 years or more than the age 62 rules apply.
for the most part the 20 year rule will pretty much preclude those apartments that would hold the most value to take over. odds are less than 20 years has those apartments close to market value since the rents were manipulated way before that by politicians to win votes .
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. that owner 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.
the apartment must be owned in your personal name , we hold them in an llc so even if we wanted one we couldn't do it since we have partners.
succession rights require that person to be living in the apartment for 2 years prior to the death.
That was helpful. I've come across Fact Sheet #10 before and I was concerned with the following statement:
Quote:
According to the Rent Stabilization Law, only one of the individual owners of a building can take possession of one or more dwelling units for personal or immediate family use and occupancy, even if the building has joint or multiple ownership.
I've seen other posts that speculate that the bolded part means that an owner occupancy eviction is only possible if you own the whole building, such as a SFR or townhouse. Would you know if Fact Sheet #10 also holds in the case of a co-op?
If breaking a rent-stabilized lease is as easy as finding a relative to live there for three years, why aren't more investors going that route, instead of selling their units at 50% - 75% below market value? Am I missing some kind of catch?
the partners i bought my share from got tired of waiting for tenants to die or move so they basically sold their stake to me for a mere pittance .
i took the shot with it because the apartments are in a very very exclusive area on 7th ave and central park south.
i knew these tenants at some point in the decade would start retiring and with no pay checks that area is very very expensive to live in. i figured they would want to eventually leave when the pay checks stopped .
well i guessed right and out of the 9 apartments 7 took lease buy out offers and we so sold them for 7 figures.
we have 2 left at break even rents as they are not leaving yet but what we sold off really makes carrying these 2 apartments no problem.
That was helpful. I've come across Fact Sheet #10 before and I was concerned with the following statement:
I've seen other posts that speculate that the bolded part means that an owner occupancy eviction is only possible if you own the whole building, such as a SFR or townhouse. Would you know if Fact Sheet #10 also holds in the case of a co-op?
If breaking a rent-stabilized lease is as easy as finding a relative to live there for three years, why aren't more investors going that route, instead of selling their units at 50% - 75% below market value? Am I missing some kind of catch?
it isn't as easy as placing a relative in a co-op apartment.
remember co-ops are only rent stabilized for the original tenant . once they are out they are destabilized . most conversions took place in the 1980's so just about all original tenants will be there more than 20 years.
that is the flaw in your logic , you are talking co-ops and not buying a rent stabilized building where all tenants are stabilized even if replaced over time . you can't just evict an original co-op tenant who is there more than 20 years or over 62 which rules out just about most co-ops that were earlier conversions since anything later isn't stabilized ...
Last edited by mathjak107; 06-09-2015 at 04:11 AM..
it isn't as easy as placing a relative in a co-op apartment.
remember co-ops are only rent stabilized for the original tenant . once they are out they are destabilized . most conversions took place in the 1980's so just about all original tenants will be there more than 20 years.
that is the flaw in your logic , you are talking co-ops and not buying a rent stabilized building where all tenants are stabilized even if replaced over time . you can't just evict an original co-op tenant who is there more than 20 years or over 62 which rules out just about most co-ops that were earlier conversions since anything later isn't stabilized ...
Thanks again. So I've seen units listed like these:
The first unit has a rent-stabilized tenant paying $1,150, so I'm assuming that one of the reasons for the huge discount is because they couldn't buy out the tenant. In cases like these where there is a significant discount, is it typically because the tenant is over 62? If the tenant were under 62 years, could you then decline to renew the lease for owner occupancy?
Our ideal location is actually the area around Central Park South. Any tips on finding a deal on a 2BR in that area? We're specifically interested in something that we would eventually use as a pied-a-terre as we approach retirement, so we have some time.
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