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I am living in a rent stabilized apartment. I am paying about one third if not one forth of the mkt value. I am planning on moving to another bigger apartment. How can I ask my landlord that I am willing to be bought out? I am afraid he doesn't do that if he thinks that I am moving anyway. How should I approach him to be bought out? If I be honest, he would know that I am planning on moving anyway and won't do it.
I am not sure what you are looking for. No one will buy out a rent stabalized tenant unless they have plans to either demolish the building or turn it into a coop/condo. The crappy rent he is collecting from you is already factored into his model of revenue and I will assume for now that there is zero incentive to buy you out. If he has been doing this for other people then you are best to wait it out because if you approach him then he will figure there is a reason.
And if this question is coming about because you read the real estate section and have seen big buyouts, just know those only occur when a big developer knows they will make more money from getting the tenant out and selling the apartments at market price after either demolishing and reselling or gut renovations. Now if you were rent controlled that would be something totally different.
Right, in a regular rental building the only benefit to the landlord would be the vacancy increase and any increase she could get for capital improvements to the apartment. The apartment stays stabilized, unless the increased rent would go over the $2500-at-vacancy (or whatever it is) threshold.
Another scenario would be if the building already converted, you chose not to buy back then, and the sponsor could sell when you leave. In that case there might be something in it for you.
I'd just say, "I'm vaguely thinking of moving to Florida, but can't swing it right now. In the meantime I'm thinking of moving my granddaughter in for a few years to help me manage, or marrying someone thirty years younger. Any advice?"
I'ts not enough that you have been living in an apartment at 1/3 it's market rent for who knows how many years, now you want to move and expect a buyout? No wonder landlords get a reputation of being mean and money hungry, they've been dealing with tenants like you who game the system.
The NYS legislature and courts have been giving tenants some rights (and taking them away) in one form or another, since World War I.
Those rights are worth money. That's why a building with market-rate tenants costs more to buy than one with statutory tenants.
shah isn't gaming the system, he's working it, just as his landlord does.
Thanks NWT. I am not gaming the system. I just need more money to move to a bigger place. I thought my landlord would be able to buy me out, a win win situation.
You could try to approach your landlord, but remember that your rights are of value to him/her only if your moving would take the apartment from being rent-stabilized to being market-rate.
It sounds like that's unlikely, so from the landlord POV, your moving isn't really of consequence one way or the other.
DG Neary Realty
There is so much inventory right of rent stabilized apartments that your apartment isn't of value to your landlord to buy you out.
Front_porch, would you please clarify? What are the conditions for moving from rent stab to mkt rate? thanks
Shah, I'm not a lawyer but my basic understanding is that an apartment under stabilization stays under stabilization until it is decontrolled.
If a landlord buys a building which the intention of owner-occupying it, that happens. If a tenant crosses the luxury decontrol threshholds by making more than $200,000 a year with some other conditions, that happens. And if the landlord makes major capital improvements (MCI), that take the apartment above a certain price point, that happens.
But I think if a tenant just leaves, the landlord gets the right to make a vacancy increase (which is higher than a normal year-to-year increase) but the apartment doesn't leave the rent-control system.
You should find more clarification from a tenant lawyer, or at tenant.net.
Its both and income AND rent level threshold.$200k AND $2500 per month. If BOTH are reached, it can be decontrolled.
But those conditions are for tenants who live in the apt. If I leave, then the income portion of the requirement does not apply anymore. Am I missing something?
They get a 20% vacancy increase which could be further increased by doing a capital improvement. If these cause the apartment to cross the rental threshold they then have to apply to have that apartment destabalized.
But once again you stated you are paying 1/3 to 1/4 of market. lets assume market is $5000 and you are paying $1800, then even at 20% increase that is a total of $2,160 and he still falls short.
The building you are in is it all stabalized or some are unstabalized. Also if you are in a new building where they are not able to destablize for a period of time this also effects the discussion.
Thanks Mikev. Some apts in my building are stab and some aren't.
What Mikev said, but in his example, the capital improvements can easily bring the new rent across the threshold. I don't know if the calculation changed when the threshold was recently raised, but last I remember the landlord could apply 1/40 of the reno costs to the monthly rent, meaning he'd only need to spend $13,600 to make up the difference for an $1800 apt.
So I'd say there's a very good chance your landlord would expect to remove your apartment from regulation once you vacate. You're obviously in the weaker negotiating position approaching him, but I don't see what you can do about that. I would recommend saying that you're considering a move but that you can't swing the transition, and if he's willing to help the result could be good for both of you. An old NY Times Hunt column described this exact situation a while back (I think the tenant got $10k) but I couldn't find the article.
The buyout deals of legend generally came about when developers looked to convert buildings as mentioned above, but if your LL buys you out for a year of the rental difference and renovates for the cost of another year's difference, his looking at a nice increase in revenue in 2 years and an immediate boost to the value of his building. A 5-figure amount is certainly possible, at the very least you should be able to swing some number of months free rent while you look, transact, renovate and move. Good luck.
You can always just broach the subject of a buyout with your landlord, yourself.
Shah - here is the math - unfortunately for you the rules just changed today and it's now much less profitable for landlords to buy tenants out. You can thank the rent stabilized tenant's lobby (Cuomo, Quinn etc) for that one.
If your building has 32 or more units then the landlord get's to raise the monthly rent once you move out by 1/60th of the renovation costs.
Assume you pay $1,000 for a unit with a market rate of $3,000/month. When you move he can take the next rent to $1,165 (not a 20% increase unless the next tenant signs a two year lease) - then he must spend $80,000 on qualifying renovation costs to raise the rent to $2,500 so he can create a market rate apartment and charge whatever he wants.
Assume he spends the money and now he can get $2,000 more per month or $24,000 per year in collected rent. Note that it's difficult to spend that much on a small apartment (many of the actual expenses don't count towards the $80,000 so in reality he'd have to spend $90k to $100K). Said another way, if the floors are in good shape he can't take them out and replace them with new floors - even if the new floors cost him $7,000 they wouldn't count as an "improvement" and the expense would not be allowed in calculating the new rent.
But let's assume it's possible for him to spend $100,000 on the renovations
Now he as to decide - is giving you any money going to make sense for him? Would you spend $100,000 now to get $24,000 per year? (Also note that if he collects $24,000 more per year in rent that his property taxes will go up by $8,000 year so he'll only net $16,000 per year in increase) But let's say you want $10,000 to move. Does spending $110,000 of cash to make $16,000 per year make sense?
In this economy where cash is king and the world is so uncertain my guess is that your landlord isn't going to want to spend the money to get you out. The last few years have been brutal on landlords - rates are down - bad debt expense is way up - legal costs way up - property taxes way up - etc etc. There's a reason you're reading about all of these building foreclosures out there. If he's like most of the landlords I know, he doesn't have the $100,000 even if he wanted you out.
just move out and sublet it
A lot of this depends on how much you are paying, and how much more the landlord could rent your place for if he/she made major capital improvements. Often it's 3 times as much. I live in such a building. When long-term "stabilized" tenants leave, the apts are gutted and the rent soars. How much is your leaving worth to your landlord? Does he/she renovate the vacated apts? Figure out how much more your landlord could gain if you leave. You can approach the landlord about a buyout and not announce that you're leaving.
Sorry Jazzman, your math is way off. Once reno'd, a landlord makes their money back and then some on a stabilized place. And I mean as a market value rental - not a condo. One individual unit. A landlord will usually make a buyout back in two years, and pay for the reno and is able to charge 4 times the stabilized rent at market value. Don't feel sorry for the landlord. After the 2 years the rest is gravy - and lots of it. New York City has no problem filling its $4000 apartments. If a stabilized apartment rents for 1000 dollars - and market value rent could draw 4,500. Do the math.
Not to mention that the fewer rent regulated tenants there are in a building, the greater its value should the landlord envision selling it. And most landlords think about selling buildings at some point.
an apartment can also become non-stabilized if the owner makes considerable upgrades to the building. the upgrades need to confirmed by the city. Then once the stabilized tenant moves, it becomes a free market apartment. If the owner has been redoing the building, they would have an interest in getting a stabilized tenant out.
shah says >>> I am not gaming the system. I just need more money to move to a bigger place.
Sorry you need money so your landlord or someone else should provide it?
Amazing the culture on entitlement we have driven ourselves to. I suppose maybe the government can raise taxes a few percent to take care of this matter for you so you can live in a bigger place.
The idea is that Shah would like to move, and although we don't know this, the landlord might want Shah out to make improvements, get a higher rent and possibly get the apt off stabilization, which will increase the value of the building and the rent roll. They both get something from this "buyout." It's not the idea that the landlord "should" pay the tenant something or owes the tenant something, but if LL would like tenant to leave LL might have to pay something to make it happen. The LL wins as much as the tenant. It can be a very civilized negotiation.
If I were the landlord I would wait 6 months and see if the tenant moves. Most tenants only ask about moving when they already intend to move, landlords know that. The tenant could sublet, but most don't want to be bothered dealing with finding an appropriate tenant, particularly if they do not intend to return to the apartment.
Not necessarily. Many RS tenants might like to move but won't, or more accurately can't, unless LL helps out. Landlord could be waiting for decades ...
shah, r u indian?
dot or feather?
"I am not gaming the system. I just need more money to move to a bigger place."
What you need the money for doesn't change that you ARE gaming the system.
"I thought my landlord would be able to buy me out, a win win situation."
The system was designed so that you move out, and the landlord gets the vacancy. That he has to pay for what he was supposed to get anyway is you gaming the system."
I have bought out lots of rent-stabilized tenants. It is hard to envision a
scenario where a LL doesnt profit from having a stabilized tenant leave.
They "benefit" but they already paid for that benefit, as it was factored into what they paid.
Imagine if you bought something online, then when it was delivered, the UPS guy said he wanted his share, pay him so you get the benefit of what you bought.
This person is simply gaming the system. They stayed as long as made sense - which is what landlords figure - and they want out, they don't want the apartment... and THEN they want to be paid for it?
Buyouts make sense when you don't want to leave, you are being compensated for losing what you are entitled to. Here, you don't want it.
You are gaming the system if you try and get paid for what you did not earn.
The landlord isn't a charity. There's no reason for the tenant to give a gift of money to the landlord.
It's up to the two parties to negotiate what the vacancy's worth. If it's a sponsor-owned apartment in a co-op, for instance, the vacancy is worth a lot, as the apartment would fall out of stabilized status and could be either sold or let at market rent.
An analogy would be a long-term below-market retail lease. Or one where the landlord wants to redevelop the property. That lease is valuable, and the tenant would be an idiot to give it up without compensation. That kind of buyout happens all the time, e.g. with the stores and garage in the old buildings that became the Laureate.
>Imagine if you bought something online, then when it was delivered, the UPS guy said he wanted his share, pay him so you get the benefit of what you bought.
Imagine you bought something in a store. And the scanner didn't work. So the clerk had to call over the intercom for the manager. Then the manager had one of the stockboys run to the aisle and check on the price. Then it's all settled and you buy the item, paying with your debit MasterCard. You go out to your car, and it's been dinged while you were in the store. Then, when you get home, you realize you probably overdrafted on your MasterCard debit card. You call up your girlfriend to complain, and she tells you about her boss giving her a hard time at work. Then you make dinner. Then you wonder, what does any of this have to do with rent stabilized apartments.
This is one of those long nights for me when I am taking breaks from boring real life work project to read SE while refilling coffee. NWT never ceases to amaze me in his straight-faced/unbiased/humble analysis of any situation, which is why he is my absolute favorite SE poster.
Similar props to Front_Porch, who always calls it as she sees it and offers practical advice from someone who has been involved in every facet of real estate transactions.
To both NWT and Front_Porch - thank you both.
And to my publicist, thank you. And my husband, I couldn't do this without you.
"Buyouts make sense when you don't want to leave, you are being compensated for losing what you are entitled to. Here, you don't want it."
If an RS tenant doesn't want to leave, tenant stays. Period. The buyout is not an issue. Staying in the apartment is the tenant's "entitlement." The desire to leave often manifests itself when landlord comes through with some compensation for tenant's giving up the continuous lease, in other words, their legal right to remain in the apartment till their dying day, should tenant choose to do that.And many do.
And long range, the landlord gains quite a bit from the "buyout" -- a lot more than the departing tenant --it's not just getting a much higher rent. It's getting the apt off rent regulation, which greatly enhances the value of the building. The "buyout" is the landlord's way of "gaming the system" -- getting a tenant out who, given the system, has every right to stay, forever.
> The landlord isn't a charity.
Neither is the renter.
> There's no reason for the tenant to give a gift of money to the landlord.
Except it isn't a gift. The person has the right to rent the apartment until they don't want to anymore. They don't have a right to a bonus after that.
> It's up to the two parties to negotiate what the vacancy's worth.
ONLY if one is being forced into a vacancy they don't want. That is simply not the case here.
> An analogy would be a long-term below-market retail lease.
Poor analogy. You committed to the space. You agreed to rent it already. You *have* to pay. You committed to it.
Btw, if the landlord comes to you and says "I will buy you out" because they need the property for something else, and you are leaving sooner than you wanted, sure, get bought out.
If you go bankrupt, and can't pay anymore, you don't get a bonus.
> Or one where the landlord wants to redevelop the property.
That isn't the case here. If that was the case, you would be forced out, then you deserve compensation.
But expecting to be PAID for something that was already part of the initial agreement - you staying as long as you want - is rediculous.
HB - Made me laugh. Fair enough. I just wanted to give some support to the nonquant posters on the board because I have been reading a lot of older streams and see that the quant folks beat them up a fair amount. I love Front Porch and NWT because they give me they type of info that I come to SE looking for. I get the quant analysis, but it is not what I come to SE for.
I think this idea of "rights" is confounding this post. As I said, it's not a question of "rights." The landlord wants something, so LL offers tenant some incentive to get that. That's how LL breaks the system. The tenant might then be able to move, and even want to move. Both win. What's the big deal? If landord doesn't want to pay, fine, the tenant stays.
"If an RS tenant doesn't want to leave, tenant stays. Period. The buyout is not an issue. Staying in the apartment is the tenant's "entitlement." The desire to leave often manifests itself when landlord comes through with some compensation for tenant's giving up the continuous lease, in other words, their legal right to remain in the apartment till their dying day, should tenant choose to do that.And many do."
If they want to stay, great. They are entitled, agreed.
But he doesn't want to. So he has the choice to leave. He wants to give up the apartment because he doesn't have a need. This is how it is supposed to work. This doesn't entitle him to payment. It entitles him to choose to leave. All along, he had the right to the choice.
Again, the lease is worth money, as is any property right. That's why the landlord paid less for the building than she would've had the apartment been at market rent.
Maybe the fact that the tenant's property right came to him by luck or chance, courtesy of Albany -- "unearned" -- is what makes all these rent-stabilization discussions hinge on what should be rather than what is. Lots of moral and ethical issues rather than the money.
I was in the same position as the OP, back in 1991 when we bought, but I wasn't up to negotiating with the landlord, pretending we might not move, and so on. It would've been just a vacancy and reno increase in revenue for him, and not worth the trouble for us, but I'll never know. By the same token, we could've had the landlord repaint every three years, which was theoretically worth money, but we chose to avoid the hassle.
So I have to add my two cents. I'm not sure what fantasy world some of the negative posters are living in (one wonders if they are landlords), but a rent-stabilized tenant (especially one who is lucky enough to have a seriously low rent and/or a large space) is indeed sitting on the equivalent of a blank check. The question is, of course, how large is that check?
I live in a very no-frills (basically a tenement) building in Chelsea. I've lived here for 20 years. In that time, five tenants have been bought out of their leases...and in each case, the tenant approached the landlord. Now, our landlord is not exactly a charming man...but he's OK. But he's certainly not interested in giving away money if he doesn't have to.
And I do know that the last tenant to be bought out (a year ago) was given $100,000 to vacate his 800 sq. ft. two-bedroom. His rent was $900 a month. The landlord did a complete gut reno (as he did with the other four) and now that apartment goes for $2,950 per month.
As one of the above posters stated, it's not at all hard to do sufficient work on an apartment to get the rent up and over the limit. And do the math! The landlord is clearing $24,000 more per year. While it will take him a while to recoup the monies spent, in the long-term, it's a no-brainer.
Now our landlord owns a dozen buildings and clearly has some cash at his disposal. A small owner of a single building may not be able to carry the necessary balance for several years.
But if you have a rent-stabilized lease...and you want to move...use your head and negotiate for some kind of package. It's your right.
Its a negotiation process. If you ask to leave he may lower the payout. Just ask and see what he says. Its still a gamble because now he may wait it out. Do not sublet he may take you to court