Negotiating Rental Reduction

As a landlord, I would like you to tell me what the benefit would be to ME to have the same tenant in the same apartment at a significantly reduced price.

I suggested a new rent to my landlord and sent him comps to back it up. I also pointed out higher-priced apartments that had been listed for over six months.
You are in a tough position if your landlord is out of town and clueless to the new rental reality. You should be prepared to move.

I offered 20 percent less and got it but I was ready to move. If I were you I would go check out what you can have at one brooklyn bridge park for 2600 and I think you would end up moving there.

NYCMatt - assuming that my estimates are correct, then the question becomes "what's the benefit of having the same tenant?" The "significantly reduced price" would apply to whomever was to occupy the place going forward.

Were I a landlord (as I have been on the west coast), the benefits of having a tenant who has never been late with rent, makes few if any special requests, receives no complaints from fellow occupants, and allows me to rent the place back for specific two week stretches, would seem relevant to the discussion.

In another environment, with steadily increasing rents and rent control, the benefits of having a steady tenant are obviously negated. I would think that any landlord receiving above market rent for their property would need only consult this website for dozens of examples of rentals that stay on the market for months at a stretch despite multiple price reductions.

NYCMatt - assuming that my estimates are correct, then the question becomes "what's the benefit of having the same tenant?" The "significantly reduced price" would apply to whomever was to occupy the place going forward.

Were I a landlord (as I have been on the west coast), the benefits of having a tenant who has never been late with rent, makes few if any special requests, receives no complaints from fellow occupants, and allows me to rent the place back for specific two week stretches, would seem relevant to the discussion.

In another environment, with steadily increasing rents and rent control, the benefits of having a steady tenant are obviously negated. I would think that any landlord receiving above market rent for their property would need only consult this website for dozens of examples of rentals that stay on the market for months at a stretch despite multiple price reductions.

NYCMatt - simple answer (to add to response above) is consecutive month's rent. If, in this example, the current tenant asks for a reduction and it is not granted and he/she moves out, doesn't the landlord run the risk of having the apartment vacant for an unspecified period of time? Also, in this environment, some landlords are picking up some or all of brokers' fees, so wouldn't that be an added cost/risk?

If I were a landlord, I'd take my chances.

I'm doing you a favor by not raising your rent. If you want cheaper, move.

NYCMatt, in early December we negotiated an 11% decrease in rent, for when, Feb 1st, we're in a very desirable rent stabilized doorman bldg on the UWS. Our neighbor, same apt, views, etc who was paying a good bit more, negotiated 17% reduction in May of 2009. The fact of the matter is most landlords are underwater for the year if unit goes vacant 2 months. So your strategy is to let the place go vacant for 90-120 days and then rent the place out to a new tenant, at a negotiated rate that is strikingly similar to what your old tenant was offering. Alright, that sounds reasonable, you go take your chances in this marketplace. Tpushbklyn, you probably need to start your negotiations by telling your landlord your intent of moving. Also you need to be mentaly prepared to move. The marketplace has dramatically changed in the last 18 months. Get all your market data points ready for negotiating with the landlord. You really need to show them hard facts, so they don't think your just making it up. I think there is a recent report that rents are down 7% in Manhattan(or all boroughs), and that is underestimating the decrease, because it doesn't account for all the concessions from landlords.

LL's know what the rental market is and they are very willing to keep a tenant in place at a reduced price. I didn't have to negotiate much to get a $375.00 reduction.

Rents where I am have been down for longer than NY and pretty steady the past year. I just received my renewal letter. It's a form letter that says "Due to increased costs we must raise your monthly rent by ____" and the blank has a big 0 in it. They don't even have a form for not raising the rent! Ha!

Anyway, I would quickly approach your landlord. Offer to send comps (although I assume she will want to check things out on her own). If she's smart, she at least offer a reduction. If not, be willing to move or get screwed.

tpush, your best bet is to have a good alternative. The reality is that if you try hard, you could find a comparable place for $1700-1800 if you are easily seeing comparables at $2000-2100. I suggest you find yourself that $1700-1800 place and simultaneously negotiate, starting at $1800 an maybe inching up to $2000. Either the landlord is open to a significant reduction, or they are anchored to $2600. If it's the latter, you simply need to move. You can suggest ways to explain to them the market, like sending then listings, but they have their own ways (such as talking to their listing broker) and can play "stupid" and pretend not to know.

Best to wait about 1.5 months before lease is up when looking for a place, IMO, and negotiate simultaneously. If it's well before that, just say $1800 and let the landlord list. Either the list will be high at $2600, which means no one will take the apartment, or the broker will talk sense into the LL.

FTR, my staring position in negotiations for a Nov lease were just over 20% less, LL's were flat. LL said they didn't follow the market. I simply stated my position: at 20% I'd seriously consider staying, at 15% it'd be unlikely, at 10% I'd almost surely leave. We ended at 20%. The truth is that's where the market was, and playing poker is easy when you've got the cards. Just don't put yourself at a disadvantage by deciding you won't move. Determine you best alternative, and decide the price at which you'd be happy to move.

Someone posted this on another thread. The draft letter is helpful for getting started.

http://blogs.wsj.com/wallet/2009/02/09/how-to-reduce-your-rent/

Good luck.

do you really think the LL does not know the market??? I think they are counting on you being a sucker. Also 2600 for a floor thru in Carroll Gardens? That was a lot even at the peak. You are being ripped

While I'm paying too much, I'm not sure about the exact amount. Another unit, same size, same building, rented for $600 less last month, but is on a lower floor and not as newly appointed. My best guess is that I'm $400 - $500 over.

In the end, personal situation dictates one's moves. If you know you'll be renting for the next two years at least, it makes strong sense to lock yourself in at a substantially lower rate. Landlords adopting NYCMatt's stance are working from the advantage of the fact that most people don't want to face the hassle and disruption of making a move. But taking that kind of hardline, knucklehead approach with a good tenant will also likely result in facing the realities of this market, with the potential for zero income until they make the proper adjustments.

I've already alerted my landlord to what's happened in the NYC rental market - this is how I'm aware of her obliviousness concerning the situation. She wanted to *raise* the rent $85 due to increased property taxes, and I sent her comparables. She apologized immediately and thanked me for letting her know, agreeing to keep things the same. As for #2600 being a rip-off during the peak, the former tenant was paying the exact same rent .. I don't think you can make that call without seeing the property. It is now, however, well over market rate.

Sounds like her "obliviousness" continues conveniently despite the info you sent, no?

If that's your LL's final stance, what is worth more to you: not moving or $6000 a year for the next couple of years. If she doesn't play ball now, she won't next year either, so you're going to be in an identical position next year. If your rent doesn't go down to market, you'll be in a long-term relationship where you are being taken advantage of. Why put yourself in that situation? Your alternative is to get into a multi-year lease elsewhere at $2000 or better, no?

tpushbklyn its this simple, is your place this nice?
http://streeteasy.com/nyc/rental/588168-condo-360-furman-st-brooklyn-heights-brooklyn

sam - no, I suppose that's my point. It isn't as nicely appointed as One Brooklyn. Although my apartment is larger than that, also has washer and dryer in-unit, is a shorter walk to the subway, does have an elevator, views, and great light. Also, this joint at One Brooklyn has been on the market for a long while and still hasn't moved at this reduced rate, so I'm assuming there's a good chance that it's your listing ..

not at all dude i am just here for hobby. Im just trying to point you to what I did when my lease was up. I went out and found at least 3 places that were nicer then mine for the saame price and I was excited to move. The LL knocked 20 percent off to keep my in my place and I stayed.

first, we have to know the size of your lot. Is this a brownstone with square footage around 850 - 900 or is it a townhouse lot that goes to around 1150? My girlfriend and I looked in carroll gardens and found that brownstone floor throughs go up to $2500 with top of the line renovations down to around $2000 with older renovations, undesireable locations. Townhouse floor throughs start at around $2400 and go up to $3000. As a note we found a townhouse floor through that is 1100 square feet, on the 4th floor for $2400.

It's a floor-through, app. 1000 sq ft, older kitchen but with dishwasher, washer and dryer in hallway closet, ten foot ceilings with exposed beams, much closet space, elevator, public roof deck with outstanding Manhattan views, heating and gas (but not AC) included. Not modern, but not run down. My best guess is $2200 .. but it would likely take some time to find an interested tenant.

"Although my apartment is larger than that, also has washer and dryer in-unit, is a shorter walk to the subway, does have an elevator, views, and great light."

Wow. You'd be an idiot to leave this place just to save a couple hundred bucks a month.

"but it would likely take some time to find an interested tenant."

That's what you think.

Thanks for the input dude, and for the heads up on my being an idiot if I leave my apartment, but you're obviously coming from a newly-adjourned meeting of the local chapter of DLWUR (Disgruntled Landlords Waking Up to Reality.)

I was listing the positives in my place in comparison to another nearby apartment which has also been on the market for three months now with significant price reduction. And as mentioned, there's another identical in my building which was listed for two months before renting out at a $600 reduction.

How can thinking that it would take some time to find an interested tenant be delusional when there are dozens of examples on this website supporting this idea? Anyway, my original question wasn't based on whether a better deal was warranted - it was on how to approach things, knowing that this is the case.

"How can thinking that it would take some time to find an interested tenant be delusional when there are dozens of examples on this website supporting this idea? "

Wow. A whole couple of dozen ... versus literally hundreds of thousands of dwellings in this city.

And on a website that is clearly anti-landlord, no less!

the rental market is in free fall until people move back in from the outer boroughs. banks and law firms have suffered permanent job loss because of the death of certain securitized products. not to mention Lehman, Bear and Merrill all going away. then you have a significant number of controlling (people who keep track of PnL) jobs from several major banks that have gone overseas. sorry bulls...but ur beat

feel free to negotiate as low as possible. land lords have absolutely no leverage what so ever for indefinitely.

Marco-I do a tremendous amount of rental business in Murray Hill and I have to say that while the rents are down anywhere from 10 to 25%, the landlords are offering to pay the brokers and also offering free rent. Many buildings still have relatively low vacancy. The Kibel at 300 East 34'th never really has more than 3 or 4 apartments availible at any given time.When a particular building has a "bad month" they tend to get very aggresive with the incentives for a week or two (free rent and OP) but once they fill up the incentives go away.Rose recently removed ALL incentives.

To tpushbklyn I say honesty is the best way to approach your landlord.Tell her what you want and why, go look and see some property that you might like to rent so if the landlord won't play ball you won't feel trapped.At the end of the day there is always another apartment-but if you can work out a fair deal-why go through the hassle and aggrevation of moving?

"the rental market is in free fall until people move back in from the outer boroughs. "

Manhattan's vacancy rate is 1.76%.

The nation's is 8%.

Manhattan rentals are HARDLY in a "free-fall".

bigapple - your reasoning seems sound. From where I stand, even if I'm paying $200 - $300 over market, the hassle would outweigh the motivation to move. Twice this much, however, is another story. The only way to be sure is to see several comparables in the same area.

"Overpaying" by $500/month would equal $6,000.

Last time I moved, it cost me close to $4,000, not to mention the untold number of hours on the apartment search, cleaning/purging/packing for the move, and the other attendant pain-in-the-ass changes one has to make when one changes his home address:

-- Mail forwarding.
-- Changing your address with respect to your bills -- and the rest of the world.
-- Changing your address with your banks, along with the requisite order for new checks for all checking accounts.
-- Changing your address with your employer's HR department.
-- Changing your phone number.
-- Blowing vacation days waiting for the cable guy/phone guy for new installation.

Of course, unless you're lucky enough to move into an apartment painted the EXACT colors you like, let's also not forget the $2000 or so for the painters, or if you're going to do it yourself, about four blown weekends.

And, of course, the hassle of living out of boxes for the next month. Or two. Or six. Depending on how busy you are at work, and how much free time you have in the evenings (does anyone really work only eight hours a day anymore?).

This, of course, is assuming you don't have kids. I don't even want to think of the nightmares associated with changing schools.

Six thousand bucks buys a lot of change of address forms, not to mention making putting up with your less than favorite shade of beige wall paint a bit more tolerable. Changing your phone number and waiting for the cable guy as legitimate reason not to move for a 20% rent reduction? Hmm ..

- Mail forwarding.

online with usps

-- Changing your address with respect to your bills -- and the rest of the world.

online, easy

-- Changing your address with your banks, along with the requisite order for new checks for all checking accounts.

online, and as for checks, i'm too cheap to order new checks for a new place, i still have checks with 19__ on them. My new checks have just the name, no address.

-- Changing your address with your employer's HR department.
easy

-- Changing your phone number.
don't have to change those anymore

-- Blowing vacation days waiting for the cable guy/phone guy for new installation.
why would you assume new place has no phone/cable - click, click to activate new account

paint color - if i were a renter, i wouldn't invest in painting to start with.

NEXT!

" Changing your phone number and waiting for the cable guy as legitimate reason not to move for a 20% rent reduction? Hmm .."

In addition to the thousands of dollars spent moving, and the hundreds of hours spent packing, cleaning, unpacking, filling out forms, missing mail, blah blah blah ... If that 20% amounts to over $10,000, perhaps.

For a few thousand, absolutely not.

"My new checks have just the name, no address."

Many places don't accept checks without an address, FYI.

"-- Changing your phone number.
don't have to change those anymore"

If you move far enough away from your old place, you do.

"why would you assume new place has no phone/cable - click, click to activate new account"

Everyone says this, and yet it's NEVER that easy. There's always some problem that necessitates a visit from the technician.

"paint color - if i were a renter, i wouldn't invest in painting to start with."

You must be in college.

Please leave the conversation for the grown-ups.

Thanks!

Dear NYCMatt:

The old "stay with your exchange" phone number thing is no longer true. I know a fair bit about telephone exchanges. As for spending hundreds of hours unpacking, get someone to unpack for $15/h your less personal objects. I've NEVER had a problem with personal checks sans address. Or even checks with my old address (simply cross out and initial). Ever, and I write quite a few checks (both domestic & foreign). Never had to wait for a cable or phone guy in a place with existing service.

Paint color - sure, I've had rental places painted. But wouldn't spend thousands doing it to get the perfect paint job. Make friends with supers/doormen/local handymen. I paid $300 for a 1500sqft+ apt. Adequate paint job.

"The old "stay with your exchange" phone number thing is no longer true. I know a fair bit about telephone exchanges."

That's actually good to know.

***
"As for spending hundreds of hours unpacking, get someone to unpack for $15/h your less personal objects."

You get what you pay for. That's all I'm saying.

***
" I've NEVER had a problem with personal checks sans address. Or even checks with my old address (simply cross out and initial). Ever, and I write quite a few checks (both domestic & foreign)."

I have.

***
"Never had to wait for a cable or phone guy in a place with existing service."

I have.

***
Paint color - sure, I've had rental places painted. But wouldn't spend thousands doing it to get the perfect paint job. Make friends with supers/doormen/local handymen. I paid $300 for a 1500sqft+ apt. Adequate paint job."

It was my building's super who charged the $2000.

Some of us aren't happy with just "adequate".

you can move a 1 bed apt in the same borough for 1500.

NYCMatt you paid 4 thou to move a 1 bed in the same borough? Ouch

"you can move a 1 bed apt in the same borough for 1500."

Sure, if you're a college kid with a futon and a suitcase.

NYCMatt my company pays for people to move all the time. we just moved our assistant from studio to studio in Manhattan for 980 $ bonded. You must be using Moesha's you dolt

I recently paid Flatrate $1100 (before tips) to move a truckful of my belongings from one 3 bedroom, 2 bath Manhattan apartment to another. (BTW, Matt, it's costfree change a telephone number when you move if your main line is cellular-- obviously, you need not change it at all When I sold my Chelsea apartment a while back and moved to a rental uptown I learned that I could keep my longtime 212 landline only if I paid a ridiculous monthly surcharge. I decided to make my cellphone my primary line. I installed a landline in the apartment for emergency telephone access, but I can't recall the 646 number since I never use it.)

looks like you are a sucker here matt no? 4 thou for a 1 bed??? ouch

At some point, if you are paying significantly over market, you WILL move. If you can't stomach the hassle this year, next year you'll look at the same situation and realize that you spent extra money for the prior year and are about to do it again. So might as well do it now. And then not delay all of the hassle factors that NYCMatt suggests - if they are inevitable then do them now. If you are buying in another year or moving out of town, etc. then the move might not be worth it.

So to the landlord, that rationality is why he might lower your rent. And if it is a small landlord, more likley to stick with a known quantity than an unknown one.

"we just moved our assistant from studio to studio in Manhattan for 980 $ bonded."

Moving a 20-year-old twinkie with a futon and a suitcase is hardly the same as moving a 40-year-old grown-up who has a properly furnished home.

Guy, you have issues. No shit a post-college kid doesn't have the same belongs as a 40 year old but what did you have bookcases moved? Your bitterness is crazy.

Someone spends $4K to move a "properly furnished home" but then has to take days off from work to have the cable installed?

-- Changing your address with your banks, along with the requisite order for new checks for all checking accounts.

hahahaha only suburban women still use checks NYCMatt

"Someone spends $4K to move a "properly furnished home" but then has to take days off from work to have the cable installed?"

Um ... yeah ... I'm not leaving a key under the mat. This is NEW YORK. Duh.

"only suburban women still use checks"

And people concerned about internet security (or the lack thereof).

NYCMatt you are 40 and still live in a 1 bed???? Maybe if you had not been paying sticker on moving costs all those years you would be in a better position? Do you even know what bonded means?

Matt, I now totally understand why you're a Republican. Same sanctimonious crap as the bible-thumping preacher who's diddling Joey on the side.

"A 40-year-old grown-up who has a properly furnished home."

"Please leave the conversation for the grown-ups."

I also find it curious that you consider a 750 sq ft 1BR as a "grown-up apartment", yet a 550 sq ft studio only 25% smaller is no longer a "grown-up apartment".

"yet a 550 sq ft studio only 25% smaller is no longer a "grown-up apartment"."

It never was.

"NYCMatt you are 40 and still live in a 1 bed????"

I never said I was 40.

And it's a large 1-bedroom.

By "no longer", I wasn't referring to time. So if I'm living in Queens or Idaho in a 750 sq ft 1BR, am I in a "grown-up" apartment? Or does the location matter?

BTW, I thought you had said you were in your 40s.

I think what he said, at some point, was "leave this conversation for the adults." But he also referenced the man-hours involved in packing belongings, having your checks and land-line changed and waiting on the cable guy as sufficient reason not to move into a superior apartment at $2000 as opposed to $2600. This may have led you to assume early-onset arthritis or senility. More likely than this is a thirty-something landlord and first time homeowner who doesn't like the idea of his tenants renegotiating their rent and him having to come up with some source of alternate income to reflect what he paid for his rental property in 2007.

"Um ... yeah ... I'm not leaving a key under the mat. This is NEW YORK. Duh."

No doorman and concierge? What kind of place do you live in? You tell someone else that they are too childish, how funny.

NYCMatt: in one of the paragraphs above you mentioned the ladlord was doing the tenant a favor by not raising rent. Can you explain how you arrived at that conclusion in a weakening market?

My landlord wouldn't negotiate- offered me $45 off my current rent. We're moving and will save $650 a month. We lose apt space but to us that's a lot of money. That pays our health insurance. We also start lower when the market starts coming back. The last thing I wanted to do was move. It is a hassle. I asked for a $250 rent reduction and they said no. So we are going. Now they have to repaint, release and lose good tenants.

good for you cccharley . good decision. that is alot of money to save

Matt: you're being disingenuous. Maybe your belongings are all antiques, that lose their value if dinged/scratched a little bit. Most of us, yes, even adults with fully furnished apts don't live like that. I've used Flat Rate (full service with packing) and not paid what you've paid for probably 3X the amount of stuff. I do have some fragile expensive china & crystal, and it has not been an issue at all.

BTW, I moved once over the summer and got a HS student (relative of super's) to unpack the boxes of aforementioned china & crystal. Not exactly difficult to unwrap carefully and place in cabinet.

Or maybe Matts "grown up" apt is a 5th floor walkup which would make the 4000 to move and no doorman to let the cable guy in all make more sense.

"My landlord wouldn't negotiate- offered me $45 off my current rent. We're moving and will save $650 a month. We lose apt space but to us that's a lot of money. That pays our health insurance. We also start lower when the market starts coming back. The last thing I wanted to do was move. It is a hassle. I asked for a $250 rent reduction and they said no. So we are going. Now they have to repaint, release and lose good tenants."

So you're saying you couldn't afford your apartment without the rent reduction?

Why did you move into an apartment you couldn't afford in the first place?

'So you're saying you couldn't afford your apartment without the rent reduction? Why did you move into an apartment you couldn't afford in the first place?'

MYCMatt, by following this logic, if landlords could afford to charge lower rent (like in 2004-05), then why raise it later? It is for the same reason as the tenant is asking for a rent cut: this is what the market rate is. I can afford to pay 2x what I pay for my current apartment, I can afford to pay full price for my clothes, but I do not. Neither do many (or most?) other peope. The market works both ways (up and down). Write this down and keep this note handy for future refernece.

"Now they have to repaint, release and lose good tenants.""

Apparently they weren't THAT good of a tenant if they tried to play hard ball with the landlord.

Good riddance.

wow, what a dick

Matt why you such a jerk. The economy tanked this year. My husband lost his job. Things happen and people downsize and the market went down 9% since last december - no reflection in my rent. I am far from alone. You are just so nasty

"Matt why you such a jerk. The economy tanked this year. My husband lost his job. Things happen and people downsize and the market went down 9% since last december - no reflection in my rent. I am far from alone. You are just so nasty"

I'm sorry to hear that your husband lost his job.

But why should the landlord have to accept a lower rent?

My mortgage company hasn't agreed to a lower monthly mortgage payment just because the economy tanked. And my co-op monthly maintenance went UP not down!

oh and I'm paying $1700 to move plus help unpacking so it will be around $2100 - I have tons of furniture and they are packing all crystal, kitchen, glass etc. How and why did you pay $4000?

Because of opportunity cost. They have many apts for rent now. So to leave this one open just to fix it up, then rent it out would cost them more than giving me a one year lease at a lower rent.

I think we all want to know how NYCmatt paid 4000 thou which company did you use?

"My mortgage company hasn't agreed to a lower monthly mortgage payment just because the economy tanked. And my co-op monthly maintenance went UP not down!"

... so you made a bad business decision by buying, and you're frustrated that other buyers are getting concessions on their mortgages but not you. Add that to your knowledge that you chose the nexus of the two fasting-dying businesses in the US (journalism and broadcasting), and it starts to become clear why you're so bitter. The major factor, though, is that you're you.

"More likely than this is a thirty-something landlord and first time homeowner who doesn't like the idea of his tenants renegotiating their rent and him having to come up with some source of alternate income to reflect what he paid for his rental property in 2007."

agree, sounds like a small time landlord getting nervous. in our case, we just sign up a lease for a year more, but will definitely move next year to a bigger place. after renting our current place for 4 years, we asked for a freeze but didn't get it as our rent is still low for what we get.

i was amazed at the amount of supply that there's available. wonder whether more listing transparency, SE for ex, is the main reason (which will not lead to the price declines we are hoping for). in 2005 we hardly found any livable 2 bedrooms available, now we got nauseous looking at all the availability. 3+ bedrooms is another story unfortunately.

"so you made a bad business decision by buying"

On the contrary, it was a very GOOD business decision.

***
"you chose the nexus of the two fasting-dying businesses in the US (journalism and broadcasting), and it starts to become clear why you're so bitter."

My business is doing just fine, thank you.

***
"The major factor, though, is that you're you."

I love you too.

"We also start lower when the market starts coming back"

cccharley, my gut feeling is that you'll soon be very happy you had moved and i'll regret not having moved. reducing housing expenses for the long haul is our goal too, but somehow i'm so pessimistic about the economy going forward that see rents going down while vacancies pile up. we thought that next year we will have more inventory to chose from, so likely we might be able to pick a nicer unit than would otherwise do this year. we will see. it's just another gamble for us.

btw, i'm surprised that your landlord didn't reduce given your husband's job loss. wonder whether management companies take a change in financial situation into account or only consider vacancies and softness of the market.

"btw, i'm surprised that your landlord didn't reduce given your husband's job loss."

Why would this surprise you?

Most landlords in this city are not huge companies, but rather individuals -- many of whom need the rent to pay the mortgage on the building, or to pay their OWN bills.

What's the landlord supposed to do -- go to his mortgage company and say "Sorry, I can't make the mortgage payment because one of my tenants lost his job and can't pay the rent."

Yeah. THAT will work.

Landlords are in BUSINESS ... they are not charities.

yep Matt, many landlords are so leveraged over here still amazes me.

my family owns RE and have tenants. keeping good tenants is part of the business, budgeting for uncertainties (yours and theirs) too. none of their properties have a mortgage on it. many landlords with mtg will get screwed if this recession last long, which is not 100% bad by the way for future buyers and conservative landlords. how many of them budget for a few years of negative cash flow? chances are none of them!

I will chime in and say it cost me $1500 TOTAL to move a 2 bed 2 bath with a budget truck, my roommate, and two guys we hired off of centralist to help us.

The post office lets you change addresses online now, and all of that took me a total of MAYBE an hour.

So the cost of moving is negligible, and can be made back easily with just a few months of lower rent.

In our case, we got newer and nicer and better location AND cheaper rent and lower utility bills (because the new construction was much better insulated.)

With the 3 free months, the move was paid before we even moved in. The lower rent and utility bills is pure gravy.

...btw, the quote from full-service movers meant we STILL would have broken even JUST from free months.

BTW, the old landlord had a vacant apartment for 2 months, had to pay a month's fee to halstead, and rented the place for 33.3% less (exactly.)

So a completely dumb move on her part (we had offered to pay 20% less to stay.)

So I have a real world example of Matt being utterly and completely wrong on every count.

great move jason! how early did you begin looking? we'll need to tell our landlord that we will not renew early on (it's RS, kind of too early to have the new lease sign though) so i'm trying to think ahead this time.

for us, it wasn't the $ of the move (we got a cheap alternative, even the boxes for free) but the headache.

Admin I live in a large landlord building - they don't care at all. I had to extend an extra month because I had surgery and they charged me $500. That made me more than angry. I'm almost thinking I should have moved uptown and gotten and even lower rent but we have a chance at free preschool now because of our new zone - now that will save us $$$$ and then we'll be very happy with our move.

I meant craigslist to find random helper guys...

We offered to extend the lease by 6 months for 20% less, she came back with 10% less and a full year extenstion. That was December 2008. i started looking even before then to get comps, which I emailed her (listings from prudential, halstead, etc for comparible condos in the hood).

We started looking (really IIII started looking) in earnest around April for a July 1 move.

The issue isn't whether a renter loses his job and can no longer pay .. that's just hard luck and a fact of life. But what's also a hard luck fact is that some people get into the market at the wrong time, and their mortgage isn't supported by an increasingly rent-friendly environment. If they're dependent upon rental income to meet their mortgage, they have to allow for the possibility that the market will change.

The flip side to this, of course, is that landlords build equity during good times where renters do not. But this "assumption" that one deserves a certain amount of rent just because he got in at a certain cost is ludicrous .. and not all that different from the thinking of many first-time homeowners who bought in with practically no money down and blind expectations for the bubble never to burst.

You do have to give this particular guy credit, however, if for nothing else than his seemingly boundless energy to cut and paste other postings to make his insightful retorts.

thanks jason. tpush, sure, let's give credit were it's due.

"If they're dependent upon rental income to meet their mortgage, they have to allow for the possibility that the market will change."

this past credit bubble provided almost the same flexible credit standards for landlords as for overstretched homebuyers. it's not bad per se, just makes things more bubblylicious. if you time it right, you get the bounty. those that didn't walk away if they can or stay put and stress out for years.

just don't see what value a small time landlord is providing when their carrying costs are the same as if the renter would make the purchase himself (when only 3.5% downpayment is needed). what's the biz model of the landlord? "let's hope for 0% vacancy and 10% annual home appreciation?"

Matt, I find your level of callousness surprising. Aren't you the one who has taken in friends who've lost their jobs that were trying to hang onto their apartments until they had pretty much nothing left? Haven't you argued that owners should get a handout from the banks (i.e., taxpayers), more than they have received so far, so they could stay in their homes?

Here's an example of someone who's had a hit to their income, has met their obligations under their old lease, and is now trying to simply get a market rate. They are getting their hands around the problem before it cascades by downgrading their costs, and you have nothing but scorn for them.

What is up?

==> just don't see what value a small time landlord is providing when their carrying costs are the same as if the renter would make the purchase himself (when only 3.5% downpayment is needed). what's the biz model of the landlord? "let's hope for 0% vacancy and 10% annual home appreciation?"

The 3.5% downpayment is a function of the govt trying to prop up a crashing market to reduce the negative economic consequences of an all-out crash, i.e. to make it drag on for many years so that people can earn their way through their losses. In more normal times, the value of the LL is (a) have the capital and credit available for the purchase; and (b) to be willing to put it at risk (lower rents, empty months, negative carry) and be compensated accordingly. Many people would simply rather not own (e.g., they think they will need to move in a few years), and a LL provides a service and should collect a premium for the risk they are taking.

Like all bubbles, the fundamental economic concept gets lost in the noise of the herd following the mantra "X always goes up". As more and more people buy, the risk premium gets squeezed: after all, rents were never going to go up more than inflaton, stock earnings were never going to go up more than inflation plus GDP growth, etc. It eventually gets to the point where the risk premium turns negative: rather than get paid for taking risk, you have to start paying to take risk. (Sure there's a place for paying to take risk, but that's called a casino and you're supposed to get entertainment value, but I digress.) Some trigger then pops the bubble, and the big deflation starts because it was all built on nothing. The herd disappears because the mantra of "X always goes up" is broken. It takes a while for the herd to dissipate, some of them make it out alive, but many get eaten. Some poor creatures even join the herd as it's dissipating, thinking "there was once a herd here, and they'll all be back".

Matt -

You're an ass. Period. While some of the information you relay might be worthy, the manner in which you deliver it is full of bile.

I recently moved a very full one bedroom apartment for about 1K.

And your argument about a LL needing to pay their mortgage falls flat if you consider that mortgage rates don't increase unless you're on a variable rate (who would do that for an investment property anyway). Which means that the LL has fixed costs year after year with only, perhaps increases in maintenance. And based on the scenarios posted and the price differentials - the increase shouldn't be THAT high year over year.

As a marketing professional and someone who in the past worked in Real Estate, I can tell you that it's far more costly to get a new tenant in vs keeping a current one. And if the apartment goes unrented even ONE month (let's use $2000 as a rental basis) - that already means for the year, you could have reduced the rent to your current tenant by $166 dollars. Now multiple that by how many months it goes vacant. Now add in advertising, painting and other maintenance that might need to be done to get the apartment ready for another tenant.

You want to add up the cost of moving for the tenant. Fine. But your numbers are way off. The LL could easily face a much stiffer loss. Not only in revenue with a vacant apt - but also the time and energy in finding a new tenant.

the LL/Tenant relationship isn't one way. Especially with the internet now in play and people posting of their experiences; comps being readily available, etc.

All that being said - you might be a 40-year old something professional - but your posts come of as a 19 year old know it all.

"And your argument about a LL needing to pay their mortgage falls flat if you consider that mortgage rates don't increase unless you're on a variable rate (who would do that for an investment property anyway). Which means that the LL has fixed costs year after year with only, perhaps increases in maintenance. And based on the scenarios posted and the price differentials - the increase shouldn't be THAT high year over year."

You've apparently never been a landlord, or run a building.

Real estate taxes, utilities, maintenance, and basically ALL costs associated with running a building properly have been skyrocketing.

"Matt, I find your level of callousness surprising. Aren't you the one who has taken in friends who've lost their jobs that were trying to hang onto their apartments until they had pretty much nothing left? Haven't you argued that owners should get a handout from the banks (i.e., taxpayers), more than they have received so far, so they could stay in their homes?"

Yes, I DID take in two friends who lost their homes due to the callousness of the Obama Economy.

I have never argued that homeowners get a "handout" of any kind -- particularly of tax dollars. I have argued that lenders should work with these distressed homeowners on restructuring their loans. This has absolutely nothing to do with tax money.

matt just about everyone is telling you something here. You might want to listen? And next time you need to move you should let one of us help you find a mover. 4 thou, OUCH!

Spell it out for me, please.

"This has absolutely nothing to do with tax money."

Sure, the same way that home prices have nothing to do with rents. What do you think it means when the government buys $1.25 trillion in mortgages, guarantees Freddie/Fannie debt, and bails out all the insolvent banks and AIG? Where does the trillions of dollars of underwater mortgage money come from if homeowners don't pay?

For the record, your friends lost their homes due to the callousness of the NYCMatt Economy: prices can only go up, so let's lever up to the hilt, never mind what rental values are because those don't matter. Let's not forget that the housing bubble and the subsequent crash is the source of our economic woes, not the other way around.

"never mind what rental values are because those don't matter."

As long as you can afford the monthly payments -- no, the rents DON'T matter.

Why are you not getting this?

"As long as you can afford the monthly payments -- no, the rents DON'T matter. Why are you not getting this?"

LOL. So then in your view, so long as a LL can afford the mortgage and the maintenances/taxes/etc., then the rent they charge doesn't matter. Therefore, if the LL is rich or has high enough of an income to cover the costs, they should drop the rent possibly down to zero if they can afford it enough.

Actually, this guy did me a bit of a service by posting his response from a landlord's point of view .. and I started this thread.

It's entirely possible that my landlord will be less than agreeable when I approach her for a reduction, but his reasoning (given the environment) is so transparently flawed that it's made me more determined to research the current market, attempt to negotiate a rent adjustment, and then move if there's something better out there.

All of the other arguments regarding the inconvenience of moving and the expenses of running a building are entirely irrelevant. I've been a landlord and run a business in other cities, and am more than aware of the challenges and costs associated with both. (Try running a small business in San Francisco some time if you want to sound off on local government making it hard on the little guy..) But these were all choices, as is to remain in an apartment when a superior dwelling is available for 20% less. Were I currently a landlord in this city, I'd have the option of thinking this through a bit more or telling my tenant to get stuffed. I wonder if this guy hasn't already done this, and is only venting his frustrations here having succumb to reality ..

Matt, i'm not against principal reductions for dead beat homeowners, as long as it comes from your own pocket.

we will wait till 2012, if prices don't come back in line with incomes by then, we plan to leave usa. we honestly don't want to move to kansas in order to be able to afford a house. gen x doesn't seem to be getting a lot of love from the gov, think ponzi of housing bubble following by the ponzi of entitlements and pensions.

in a way, helping over leveraged homeowners prevents price discovery to our disadvantage. but that's fine if it ends up saving us the headache and the hundreds of thousands of $ of the entitlement tsunami by encouraging us to leave. it looks like a blessing in disguise, but it has a sour after taste because we have been responsible. besides the whole situation is a product of ill-conceived government policy in both cases: dream of homeownership in the 1st case and kicking the can/pandering to the elderly in the other.

seriously, if at least we are offered to be spared of SS and medicare by being able to opt out, we would consider staying. but this feels like a back to back record big ponzi against us. anybody else feels this way?

"LOL. So then in your view, so long as a LL can afford the mortgage and the maintenances/taxes/etc., then the rent they charge doesn't matter."

I'm not talking about landlords. I'm talking about individual owners.

"I've been a landlord and run a business in other cities, and am more than aware of the challenges and costs associated with both."

Other cities are not New York.

BTDT.

"we will wait till 2012"

Good plan.

That's when the world will end anyway.

You're right ace - I considered trying to start a business when I landed in NYC, but after my experience elsewhere and seeing what the city puts you through, I figured it wasn't such a great idea. Again, it's a choice .. just like choosing to own or rent, and dealing with the realities that the market presents.

Sounds like you've been everywhere and done everything. And as long as you're getting your tenants to fall in line, I've got no problem with that. But seriously .. you should consider going pro with the whole cut and paste thing. BTDT - sheesh, this alone makes me glad I don't have you for a landlord.