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To make a long story short we owned a bunch of co-ops over looking Central Park and over the last decade have sold off 7 out of 9 of the apartments by buying out the leases of the stabilized tenants who were the original tenants in the building when it went co-op decades ago and who did not buy ..
So basically we are stuck with these two apartments which are worth 7 figures each and break even rents so at the his point we could give them away free and it was a great deal overall ..one apartment has a 70 year old but the other has a family with a 26 year old son with succession rights .
So we offered them to the two tenants for 50 cents on the dollar , no money down and we would finance for 7 years ..... they both stalled and stalled hoping one day we would give them a better deal .... it was already the deal of a lifetime for them .. they would each have had more than 600k in equity day one ...
Well got a call an hour ago that our broker found an investor who wants to buy both apartments as a package and made us an offer and we accepted .. it is an all cash deal .... these two tenants just blue an opportunity of a life time ... they could have bought them and sold them immediately and saw a 100% return...oooh well ..
But can they stay with their same rights with the new owner, if so this is why. If it's rent controlled they can live in Manhattan in a place where they pay maybe 20% of the going rate. If they can live there forever why buy it, you can't take it with you. Plus if you buy then you have to pay the co-op fees which can be higher or as high as some rents. If it were me and I was told I could get a 600K return I would take it and move to Florida and buy a home for $150K and live nice, the only thing that may have stopped them if they were disabled and Medicaid would have taken a lot of that money and then kicked them off the program. If you are in the city with the top doctors and you are getting 75K worth of treatments and medications why get bumped off have to find your own way to pay the higher rate that will cost you $100k a year and leave where you love.
I met a guy who lived near Tompkins Square park in the 90s, not a great area, but decent and still expensive, he was paying $200 a month rent controlled 1/1 that would probably rent for $1500 back then.
I knew another guy who lived in a studio apartment around 45th street mid town and he had an offer to buy his place for about $35K in the early 90s and I told him he should do it. I lost touch, but I don't think he did.
Last edited by LifeIsGood01; 03-28-2019 at 05:48 PM..
Rent controlled is not rent stabilized ..rent controlled apartments are a thing of the past and only applied to original tenants in the apartments since 1971 ..onlyv8% of all housing has rent controlled tenants left .
rent stabilized is very different , it only means your increases are decided on by a board ...they have been real world for a long time ...rent stabilized rents are all over the map ranging from maybe 60% of market to market ... there are some stabilzed apartments I love that were put up by the ashkenazi investor group where a studio is 3500 , a one bedroom 4500 and 2 bedroom 5500 a month ... this investor group is the group that bought our commercial lease rights ....
The 26 year old in the apartment is an attorney... but they were playing a game where they would stall and stall and see what we would offer .... so if this deal closes then they stalled themselves out of a windfall.
The co-op maintaince is less than the rent by a lot . But of course if you are buying a a 2 million dollar apartment you typically need a pretty large income and the building requires 25% down .plus the cost of living in that area is brutal...
We are considered original sponsors so we can sell our apartments with any terms we like but no one else can anymore ..only us and Bernard Spitzer were considered sponsors.
Sponsors own the unsold apartments
Last edited by mathjak107; 03-28-2019 at 06:55 PM..
To make a long story short we owned a bunch of co-ops over looking Central Park and over the last decade have sold off 7 out of 9 of the apartments by buying out the leases of the stabilized tenants who were the original tenants in the building when it went co-op decades ago and who did not buy ..it was non evicting and they stayed on as rent stabilized tenants all these years .
So basically we are stuck with these two apartments which are worth 7 figures each and break even rents so at the his point we could give them away free and it was a great deal overall because the package was so lucrative ..one apartment has a 70 year old but the other has an older couple with a 26 year old son with succession rights .
So we offered them to the two tenants for 50 cents on the dollar , no money down and we would finance for 7 years ..... they both stalled and stalled hoping one day we would give them a better deal .... it was already the deal of a lifetime for them .. they would each have had more than 600k in equity day one ...
Well got a call an hour ago that our broker found an investor who wants to buy both apartments as a package and made us an offer and we accepted .. it is an all cash deal .... these two tenants just blew an opportunity of a life time ...not so much the 70 year old but the couple with the 26 year old sure did . they could have bought them and sold them immediately and saw a 100% return...oooh well ..ya snooze ya lose
What is the current situation with right-to-renew regarding rent stabilized tenants?
It is a birth right ha ha ha .. they become part of your family in that regard .....
If they are under 62 you can take one apartment for yourself or limited family members ... but real estate held in corporation or LLC name cannot do that ... most of the time these kinds of holdings are only held by corporations and LLC partnerships which ours is
It was great to invest in places like NYC, SF, LA back in the 90s or earlier. Homes appreciated 5x, 10x,...
Now? How much of a return are you going to get on a 3bd/2bath house that costs 1 million ? Will it 2x 3xor more ? You'll end up losing money most likely over the long run with interest, taxes, maintenance
No need to go back to the 90's... 2012 is far enough back to see 4 to 5 fold increase in parts of Oakland... these are honest numbers for homes at the low end of the market... which had dropped to 80 to 100k and now 400 to 500k 6 years later.
I bought my first house @ age 25. It was a mistake because it locked me into a dead-end town with little opportunity. I do agree that it's often an unwise move for younger people who're not yet established in a career/life. The ten years I stubbornly held on to that house could have been much better spent pursuing opportunities in other locations, the whole country could've been fair game for getting life started.
Having said that, buying a house to live in once you've gotten settled can be a great move - maybe the best way for some people to build any net worth.
Where in the PNW did you buy... some areas certainly have experienced growth
A year ago my stepson, at 22 bought a huge (to me) house (2,400sf) with his 21yo wife. They are completely house poor. He painted 3 rooms (kitchen, dining rm, family rm) including him deciding that he didn't like the textured ceilings and attempted to sand it down in the huge family room. He hasn't done anything else in the house. Didn't even paint the bedrooms before moving in....closed on a Thursday and moved in on Saturday. Family room has a new $4,000 leather sectional that he sat on with wet paint on his clothes, a big flatscreen TV, and an upright piano that the seller abandoned when they moved out. The living room is bare. They bought a dining set. That is all they have on the main floor of an 2400sf house. Their daughter has about a 14 by 18 room as a playroom. They both drive crap cars. He took a work assignment 3 hours away and has come home one weekend in the 2 months he has been gone. She went up there once with their child. Not sure if he's wiped out by the work schedule (renovating a ship or submarine working 10 hour shifts), or if it's relationship related, but he's close enough to drive down early on a Sunday morning and drive back on Sunday night to see his daughter if he wanted to. But I veered off course from the topic.... They bought too much house, too soon IMO. They financed 97% of it because "they had to have it".
Smart ones learn overtime... and they do have time being young.
I had the proverbial cinder block and pine board shelfs in my home with hand me down furniture... nothing was new... and I mean nothing.
It took me the better part of a year to get the little cottage sorted out... new roof, windows, doors, insulation, drywall, tub, cabinets etc... furniture was not even in my thoughts...
My $800 car lasted 20 years... some have called it crap but to me it was like a high yield savings account... cheap insurance, cheap tags, no smog and not depreciating...
They must have sufficient income to finance 97%....
Real Estate markets are way too local to make such broad generalizations here.
Everyone is using their anecdotal evidence to either suggest that buying a home in your 20s is either "right" or "wrong"...
That's not how it works. There are way too many variables and way too much variation even in localized markets (let alone personal preferences/mindsets) to make such a broad generalization.
Some have said it was their single best financial decision ever... I would be one of those.
But I have no idea house prices outside of the West Coast... California, Oregon and Washington where I own property... but it all started with the little cottage in East Oakland at age 22...
The 26 year old in the apartment is an attorney... but they were playing a game where they would stall and stall and see what we would offer .... so if this deal closes then they stalled themselves out of a windfall.
My brother had similar from a Doctor tenant renting the building where his practice was located...
The young Doctor thought he knew it all... and was quite a difficult tenant... the lease was a modified NNN lease... except for the roof maintenance was on the tenant... he sent a certified letter listing deficiencies and my brother responded giving the Doc a timeline to make repairs with a follow up inspection...
Anyway... after a couple of years my brother was ready to move his equity and offered the Doc first opportunity to buy it... Doc came back saying the property was only worth a fraction of the asking which my brother ignored...
About 3 weeks later he gets a panicked phone call and emails... the Doc is ready to buy As-Is with a 21 day closing... my brother said sorry but the property is in contract at full price... see, a competitor to the Doc bought the property to expand his practice to two offices and word got out the Doc would soon be out in 3 months when the lease terminated...
yep , some people are just blind to opportunity... they wait so long for that ship to come in the pier collapses ....
the tenants don't know they may have lost that once in a lifetime opportunity yet . we are not saying anything until we close. the investor is buying it for his kids as an investment ... he is paying cents on the dollar so even if they get to sell the one apartment with the 70 year old at some point , it not only gives him a profit but the other apartment came along for the ride free so it is a great deal for someone looking at a very long time frame for their children .
this is where having liquidity pays off like it did for us ..no lenders will loan on these kinds of deals so you need your own money to pull them off . you don't want equity loans either because these have open ended time frames and can run up large interest bills. this is why i say if we still had all that money tied up in a house we would have passed on the deal of a life time .. so renting gave us liquidity to take advantage of situations we otherwise couldn't .
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