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we got our tax break 40 years ago or so when the city twisted everyones arm to join the rent stabilization deal or have many write offs and new taxes levied on your building.... the city promised it was only to prevent rent ripoffs and landlords would never get hurt.... boy did we get screwed
when rent stabilized buildings are sold the price is based on the rent roll, expenses and location.... all that may be fine when you invest in a building but 5 years later you could be under water if expenses and taxes sky rocket....id never invest in another building in nyc again, ever..... 2 more rent stabilized apartments left and when those are gone we are out of real estate here forever.
The only way new construction is under stabilization is if it's a tax abatement situation, and guess what? Nobody wants to build a stabilized building because it's not profitable, even with the tax breaks, since it's not difficult for expenses to outpace the income under the guidelines. If a building has more than six units and was constructed prior to 1974, it was stabilized, unless it was condo or co-op. But, even that is a grey area, since it could have been stabilized before conversion, and as such a rental unit can still be stabilized even when the rest of the building has different ownership.
I believe the $2k rent threshold dates to 1993 and later, meaning that the apartment ceases to be regulated when the rent increases top $2k either through vacancy and reoffer at a regulated rate above $2k (applying the vacancy increase to the stabilized last rent rate) or topping out under the RGB's increases during tenancy at over $2k and the tenants earning more than $175k per year, when a petition for deregulation has been filed/granted. This is suspended, however, if the property receives any sort of tax abatement, under the current plan.
Now, if there were a real proposal on the table where the difference between expenses and rent could be written off the operating income of the building, that would be a bridge to make it somewhat of a better system. But, there is no such tax break, which, in turn, causes prevailing market rents in the same building to be at a significantly higher rate, just to keep the rent roll vs. expenses on an even keel, much less try to make a living from their investment.
The current system is inherently flawed, and it's not easy to keep a building on an even keel when expenses outpace any increase offered by the rental board, and when there are tenants (not all) who abuse the system and have more rights to the property than the owner. And, it's incredibly difficult to sell a stabilized building, especially in this market.
Large property management companies can make stabilized buildings work, spreading risk/expense over multiple buildings/income levels in a portfolio, but for most landlords who are running a small business, it's increasingly difficult to get a small return on investment.
Rent Control is Mod cut: language. If it was about poor/working class families then it would make sense, but you have bankers on wall st living in RC apartments becuase their Great-Grandmother on Ave B got her unit covered after WWII. Nice, isn't it? Meanwhile, Cops, Firemen, Teachers and the middle class get to experience lovely Jersey.
Let me let you in on something: The reason why NYC always bends over for "Yuppies" and "Hipsters" is becuase they're the only ones paying for socialist stuff like this. I've said it a million times: NYC is a ponzi scheme with a small wealthy elite subsizdizng what is an essance a giant housing project, the immigrants excluded. When the wealthy flee, you'll all see how this stuff does not work.
Last edited by Viralmd; 06-25-2009 at 05:11 PM..
Reason: Language
No body signs up for stabilized building, they are already stabilized or control.
You buy the building has is, with the X amount of stabilized apartments unless you are lucky and get a new building with no government controlled apartment.
IS NOT A CHOICE.
you know what ur getting into though there was no jack in the box, it would be the buyers due dillegence to find this out. if u didnt like it then dont buy it
you know what ur getting into though there was no jack in the box, it would be the buyers due dillegence to find this out. if u didnt like it then dont buy it
that is not true, you buy a building that is making money, but then in 5 years it doesn't. Then you can't even sell it because now the building is almost worthless.
By your way of thinking there would be no landlord, and the government would own every single building in NYC or the banks.(except of the new ones that are not regulated).
No one can predict the incredible increase in heating bill, etc.
And most people buy the building thinking they would payoff the people living in rent control to get them out of the building.
If some lives in a rent control, dont ask for anything if it breaks fix it yourself. LL is already losing money with you why invest in it.
The good news is that sooner or later all rent will be free from this socialist idea.
Most buildings that are majority stabilized in outer boroughs are really not bringing in huge rent rolls. Many are small investor owned, and said investor runs it as a business themselves, or it's a family business. There are not huge profits to be gained in many respects from running a building in the city, but one has to question why when one invests private money that they are required to provide welfare for tenants, unrealistically subsidizing a lifestyle that is unaffordable.
If there's a housing shortage for those who truly need to have such controls, impose means testing (the $175k rule is a joke for $2k rent), and allow the owner/operator to deduct the difference in expenses from operating income for a given unit whose regulated rent may be outstripped by the expenses of that unit. That way, market rate tenants are not overpaying to bring up any shortfall in allocated expenditures per unit to try to keep the building afloat.
If $2k is the maximum rent that's stabilized, then the income cap needs to be at $80-$90k as with every other rental in the city where 40x-45x rent is required in gross income to maintain the lease. At $175k in income, a market rate apartment would be deemed affordable in the $3800 - $4375 range, depending upon which multiplier is used, just about double the max rent under the current guidelines. Now, I would support adjusting income for families, since it's not the same as for a single or a couple, but the current system is completely out of line with regard to market considerations present in the city. And, stabilized apartments can be found in the city without too much fuss, all one need do is pay a hefty broker's fee to get one in a choice neighborhood, since they are just about all under broker control.
The stabilization system is a sociopolitical policy imposed on a private investor, and it's not the same as risking capital because the market is not free to move whereby risk is dictated by the market. In this case, risk is dictated by movement in expenses, subject to a ceiling imposed by the RGB, that can leave a shortfall on an individual unit, which, in turn, can drive market rents higher in that building to cover expenses.
suppose the city told teachers that anyone in their class thats been in that school for x amount of years theymust give a portion of their salary to ...thats regardless of the income of that person or financial need..its just because..... welcome to rent stabilization..... forced charity..
suddenly everyone who lives in your apartments are your family ha ha
And it's not just the government-forced low rents. Hand in hand with that is the near impossibility of evicting RS tenants even when they break the law.
I own a small well maintained building. I have no problem with my tenants, except two. They are cases in point. One is a chronic non-payer of rent. She is always a few months behind. When it gets to four or five months I hire a lawyer and go to court. She comes up with the money and then immediately stops paying again. Sometimes she comes to court with a list of three or four repairs, a couple of which she caused herself or which are not my responsibility. This has been going on for many years. It has cost me a lot in time and legal fees.
Another does not even live there for most of the year and I know for a fact he has sublet and profiteered on the low rent. It took me a while to realize what was going on. This guy is wealthy and spends most of the year vacationing. His father is a successful MD and wanted to buy the building from me to give to his son. And he's been living there for 10 years at a little more than half the market rent.
Both of these tenants know the RS law inside and out. They know what they can get away with (which is a lot) and what they can't get away with. The law ties my hands as far as eviction goes, unless the tenant makes a big mistake - which is unlikely.
omigawd, I think you will eat those words. I eagerly await your research. But I won't be surprised if my wait is in vain. Although I will expect an apology.
Well....still waiting. Just as I thought. Forget it.
Listen, virtually every economist and every study conducted have come to the same conclusion. Price fixing of rental apartments results in higher housing costs for everyone except those who benefit from the fixed prices. The majority of New Yorkers bear the costs of regulation through higher market rents or higher taxes. Yet a minority of regulated tenants has been able to exert a disproportionate influence on the political process.
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