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selling a rental building in nyc is about ill liquid as you can get. you almost have to present the deal of the century to unload one and even then it can be tough, unless you get someone who just finished the no money down series of books and are on their way to their real estate empire and riches beyond their wildest dreams......
selling a rental building in nyc is about ill liquid as you can get. you almost have to present the deal of the century to unload one and even then it can be tough, unless you get someone who just finished the no money down series of books and are on their way to their real estate empire and riches beyond their wildest dreams......
This year there was an enormous sale of 48 rent-stabilized buildings in Queens for $300 million, average price $160,000 per unit. The purchaser was a company, not an individual owner.
dont forget its not the fact a building is stabilized when its sold as what the rent roll is... a building like we live in queens has a very high turnover so even though its stabilized 90% of the apartments are pretty much now at market rate ..... its buildings with lots of origonal tenants that are paying 20-25% below market that hurts resale value.....
my wife has lived in the building over 25 years so we are at about 80% of market value but most apartments have changed hands many times
Yes, I know all about the history and I think that "history" is actually happening today as well, but the fact is this was still an enormous purchase of rent stablized buildings just this year.
Also, I don't understand why it's so hard to sell a rent-stablized building if (as you say in another post) most of the units are at market rate anyway. Is it just because all the laws and paperwork that go with rent-stablization are too much of a hassle for the landlord?
its because the value of a rental is based on the rent roll x a multiplier based on the location of the building , it can range from 2x the rent roll to 10x depending on location ... then expenses are looked at as is the condition of the building and a price is figured out..
depending how long tenents have their apartments in a building they can be paying as much as 25% less than they should be and that kills the rent roll decreasing the value of the building. dont forget every time a tenant moves out the rent is pretty much brought up to market so the bigger the turnover the greater the value of the building...
with so many co-ops avail that are completely free of all regulation i cant understand why anyone would get involved in a large rental building today unless it was an extremely profitable building....
actually we live in a rental only building in bayside and for years we were hoping the owners would take it co-op... in this case most apartments are over 2,000 a month so they are decontrolled and the apartments that arent changed hands so ofton that rents are at market on most... our apartmentis one of the few that are actually at 20% below because we are there so long..... in this case its profitable for the owners but thats only bacause almost everything is at market
Maybe this should be in a different thread, but do you think the purchase of all those rent-stablized buildings in adjoining neighborhoods (Woodside, JH, Elmhurst, Corona) etc. and the tactics of the buyer to get more apts up to market rent will end up having an effect on the overall average rent in these neighborhoods?
I have no idea of what the numbers are, but say if a neighborhood has 30 large rent stablized apartment buildings and this one buyer comes in and buys 15 of them and proceeds to evict as many of the long-time tenants as possible and raise rents, wouldn't this eventually have an effect on the average market value of an apt. in this neighborhood?
no effect,everyone else already pays market rate except a few old time tenents, its a moot point if they are brought up to the same level as you.....
its like owning a business. if everyones business is profitable already but yours and you manage to increase profits to their level your just the same as them, no one is any higher or better off, just you as your operating more efficiantly ... in our business its like we make most of our profit on the buy, not the sell.. we cant charge more than our closest competitor but the more efficiant we run and the better we buy the products we sell the more profitable we become...
thats the whole point, the fact that some old timers pay below market has absoluetly no bearing on anyone else at all... everyone pays market and even if you managed to get a recent apartment your pretty much at market as well.. the stabilized apartments are increased 18% plus improvements when the tenant moves out.. no longer is that apartment undervalued... the 3% rent increases are also now real world so the savings is long gone... anyone who thinks this helps them if they are not in these apartments for a long time already is running on yesterdays news.
only one effected is the landlord who has to accept less return from these tenants just for the simple reason they lived in the apartment a long time and has to live in fear under the guidlines that some day the increases may once again be so small as to not even keep pace with expenses....
thats why once everything is sold im done with real estate, to many better returns for my money elsewhere with alot less grief
Last edited by mathjak107; 12-27-2008 at 03:21 PM..
Math is right...who in their right mind would buy a rent stabilized building if it makes very minimal profits?
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