Do renters hurt the value in a condo building....?

Yes.

i was surprised that the previous buyers were concerned about the renters instead of relieved. the risk of the building going to foreclosure if units had remained vacant should be the most scary thing imho.

For many people, empty units are better than units filled with renters.

you are sure right NYCMatt (to my surprise). i would be wondering what happens with my unit if the building goes under in my sleep.

Renters don't care if their behavior creates costly NYC building violations (improper recycling, disregarding window guards). Owners do. Renters do not care if they damage the common walls and hallways. Owners do. Renters do not care about the long term maintenance of building components and systems. Owners do. The way a renter treats a condo (versus an owner) is similar to how a renter treats a car (versus the owner).

Admin

If Mr. Levine is successful in renting the bulk of empty units at His 1BB developement, this will prove to be a brilliant stradegy.....!

giving the renters a 1 year lease, until the market recovers somewhat....thus avoiding forclosure on the developement!!!

"If Mr. Levine is successful in renting the bulk of empty units at His 1BB developement, this will prove to be a brilliant stradegy.....!"

Brilliant for the developer.

A nightmare, however, for the owner occupants.

"“It’s not a problem if it’s a handful,” Mr. Gerringer added, “but if you start to rent 25 percent of the building or more, it takes on the flavor of a rental.”"

Matt, didn't you get the feeling that this was slightly disingenuous? that the reason they don't go over 25% is that new buyers will not get financing as easily due to FNM guidelines?

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"The new Fannie Mae guidelines increase to 70% from 51% the number of units that must be sold or under contract in order for buyers’ loans to be eligible for purchase by Fannie Mae. "

"Fannie Mae has also restricted lending for buildings where 15% or more of owners are 30 days late on their condo association dues. Fannie says that the rule won’t apply to condo owners who want to refinance."

http://blogs.wsj.com/developments/2009/03/18/condo-buyers-may-have-a-new-way-to-leave-contracts-thanks-to-fannie-mae-rules/

NYCMatt

The owners of the units will lose big TIME if this developement goes into forclosure!

given the circumstances in this economy.....the developer and buyers need a solution to keep this developement and others from going under....choosing the lesser of both evils...renting the empty units!

A rider in the lease for renters in a condo building needs to state the following to protect those unit owners concerned!

"any damage to unit leased or common areas will result in loss of security deposit....!

If damage is greater than total of security money....additional fees will be charged...!

What probably hurts most is knowing that the renter next door is paying a fraction of your carrying costs for the same place with no risk of losing her downpayment. No amount of paint will cover that up.

A building going rental is also demoralizing for current owners. Your neighbor renter is often paying a fraction of your mortgage payment.

Also another part of the reason to own a condo is because you need to pony up money to get into the building if you really like the building. But if the building rents a significant number of units, it disincentive to buy. Less demand equal lower prices.

This thread originates from this article.

http://www.brownstoner.com/brownstoner/archives/2009/07/renting_1_bbp_w.php

This thread originates from the "new york times article" mentioned........ in the "FIRST" post!!!

To many renters do hurt the value of a building. Why would anyone pay top seven figures to live next to someone who can be there for a few thousand a month. In small numbers no problem and probably a plus. but too many and watch out.

What's the best way to determine accurately (not the sales version of reality) the ratio of renters to owner-occupied in a condo building I might consider buying into? Beyond the questions of perception, esteem, quality of the living experience and others raised here (which I think are all good questions) I've heard that mortgage lenders look at these ratios as part of determining value and risk during their vetting process.

I've started exploring ACRIS but don't know how to maximize it's potential. Also curious if anyone can verify my point about lenders.

jim123, how to count the number of renters in a condominium building is a good question and I don't know an easy answer. If anyone reading this thread knows, I hope they will share.

ACRIS shouldn't be any help because there is no obligation to record leases.

In theory the Board of Managers might have an idea, but in practice it seems to me an owner could easily keep the existence of a leased unit quiet. The property management company probably would not know or care.

The head doorman, if any, might be worth chatting up, if it's the kind of building where the doorman has his ear to the ground. Not all buildings have such a person, obviously.

In most cooperatives, by contrast, rentals require board approval and so they will have a fairly accurate or even perfect tally.

{Manhattan real estate agent.}

A couple of years ago i asked a broker about a building that seemed heavily rental, wondering what lenders thought of the ratio. He said the managing agents usually just lie when submitting the information to lenders during the application process. Lovely. I wonder if that's still true.

Almost all co-op and condo conversions have a chunk of renters who chose not to buy. Very often 20-30%. I don't think anybody'd say their presence is a problem. Same goes for condos that were new 20 years ago. Not everything sold, so developers rented them out.

We're not talking bargain rents here, so unless renters have "renter scum" stamped on their foreheads, you wouldn't know.

The thread should be "Help! My condo is full of riff-raff underwater owners! Anybody who could get a loan..."

Thanks for the comments and tips. It seems like there might be no easy way to verify. Therefore it seems questionable that a potential lender could easily discriminate against any given bldg/development based on this ratio. Curious to see if anyone else weighs in here to the contrary.

Jim123

There is definitely a way a lender will know how many buyers have actually closed in a building....by looking at a data base like propertyshark or city record!

Thanks Fayek - I have been able to figure out how many units have closed (let's say in a new development) by downloading the stats from ACRIS. It would take a little bit of simple math to determine total number of units minus closed, being careful to track resales. Of those I want to know how many are owner occupied versus rented out. Thanks.

yep, ACRIS rocks!!!