Why Do New Tenants Get Lower Prices?

It's a bet that you won't move, simple as that. Last year, when market rents dropped 20%, you paid the same and didn't leave.

BTW, here's a history of their asking rents:

http://www.nybits.com/apartmentlistings/lenox_terrace_archived_rentals.html

I agree with Inonada, but its more than that. The building is looking to maximize revenue. Empty apartments compete in the market place and will be filled at going rate. Existing renters by and large are more prone to inertia provided any price differential is not too great, and keep in mind what caused last year's high vacancies was job losses. To put this in terms of an example in a building with 100 units and annual 20% turn-over, assuming 10% renew and 10% walk, only the 10% need be deeply discounted. The building would be foolish to renew all 20 at market rates if history shows half will stay. In creating the multiple price points the building maximizes revenue.

Because playing inertia is a numbers game that can work in the landlords overall favor....its a delicate calculus and it depends on the overall market.

If you get your discount, they assume that first think you'll do is tell all of your neighbors who will all demand the same discount.

The smartest landlord will understand the market conditions and find the optimal level of hardness with which to treat existing tenants. Turnover is expensive. Plus they use the free rent game to build in rent increases for new tenants upon renewal... So if that's part of the "break" new tenants are getting that kinda needs to be taken with a grain of salt.

I don't even think free months are being accounted for in OP's situation. A browse of the link I posted shows the drop from $2000-ish to $1500-ish between 2008 and 2009.

This is so simple. Tell them ur leaving and they'll lower ur Rent. Landlords are so screwed

I'm just saying. All you can do is move. Rather than focus on what the new tenants get....one needs to price their own trouble, survey the market, and come up with their own bottom line. The rest is a distraction.

I like to be bearish as the next...but the rental market is not terrible...not terrible in the sense that at 2000 levels they seem to be a market to rent to.

how much are 2 bedrooms there for newcomers? And is it dog-friendly?

Hey, thanks for all of your responses. I already declined the renewal and signed a lease in another building. We initially signed a 2 year lease when we moved here and another 2 year renewal after that. Before I started the negotiation process I was prepared to walk if we didn't get a discount. To be honest even a $100 drop in rent would have satisfied me but no dice.

Sorry Dogismy - I'm not going to help advertise the place. Good luck w/ your search though.

Good luck. Sometimes the landlords force your hand. I had a guy who wanted to raise me on an annual renewal in summer of 2002! By the end, he offered me flat... which if he did at the start I would have accepted to save the trouble. Turns out the trouble had already found me something nicer, at the same sticker price plus two free months.

Good for you for moving, Twin. Inertia didn't cripple you. Mazel tov.

How much is the move costing you?

Glenwood Mgmt also charges more for renewals than they do for new tenants and many people have left because of that. The building down the block has several past tenants of my building simply because these people got frustrated with Glenwood's increasing rents.

They tried to increase my rent last November. I called and tried to negotiate, but they wouldn't negotiate. So, I sat tight and just kept paying my same rent and didn't sign the lease and didn't move. They did not cash my checks, but eventually (a couple of months after lease expiration), they contacted me and offered a reduction in rent. I accepted and signed the lease with slightly reduced rent. I stood my ground. I still think my rent is high, but it is at least acceptable relative to other apartments in the bldg.

Thanks for the well wishes.

The last straw was when my offer to pay more than a new tenant was declined. It didn't make sense to me to accept $1600/mo and the possibly of the apartment being empty while I was willing to pay $1750 (or more). Plus dealing with some of the characters at the management/leasing offices was definitely an exercise in patience.

If we u-haul it the move will cost around $100. Using insured movers, the estimates are about 300-500. With our new lease we got a free month's rent. As long as we keep the moving expenses less than a month's rent, its just more motivation to leave.

kar3f – couldn’t they have started eviction proceedings against you?

landlords are like shitty poker players right now. theyll keep raising and then get weak all of a sudden because they know thier hand sucks and they run out of ammo.

Marco, your obviously wrong. Two posters here tried your bullshit brinksmanship and ended up having to move. The management companies are in control, not the renters. And none of them are going broke right now, are they?

Jim, you make money on transaction volume. Why criticize brinksmanship and support management companies if this might lead to more renters (who readstreeteasy) deciding to stay put based on your input.

... I'm just saying....

Jim, clearly you are wrong about the state if the rental market . Tick tock tick tock June is almost here and things are still weak. Just like last year

How's extell doing ?

One other possibility is that there is a commission, bounty or bonus paid to the agents for bringing in fresh meat and no additional reward for retention of a current renter. The agents are usually not the actual owners of the building so the management contract may be working against those (who could be known troublemakers!) already in the place.

Well I will for ONCE defend Jim....he is always on about "prime" manhattan, and Lenox terrace is not even in prime HARLEM let alone prime Manhattan, (though its a nice bldg, just not a nice area) so its not necessarily the best example to bash his argument.

Pay up like a good tenant, or move along, and pay moving expenses and perhaps a brokers fee. Being a tenant sure has it drawbacks. Good luck landing in a good spot *for a while*

...but yes, i had a similar Central Harlem to East Harlem move....our entire move cost maybe $1500 at MOST all-in, and we saved $600 per month...so we broke even 2.5 months into a 26 month lease. And got a nicer and newer apt - from walk-up to doorman/elevator with much lower utility bills to boot. The utility bills are like $100/month lower because of better insulation + heat included.

So our math DEFINITELY worked for moving.

In places like Murray Hill and Fidi, sometimes moving does not even require a VAN...when I lived in 10006 people would LITERALLY move across the street or next door to keep free months etc.

So in that sense Jim Jones does indeed lie.

Are the wsj, the nyt and crain's all liars too? Because they keep writing articles that support what I'm saying. Rents are up, and will continue to rise, concessions are being removed. And vacancies are low. So a liar? No sorry. Weak rental market? Far from it. I just had to bring on a new assistant. And I'm writing this while far far away from ny on vacation.

It's called a "nuisance rent increase." Landords start you out at a lower rent, and raise your rent each year until you reach the highest tier of rent, at which point you no longer get any rent increases (except for normal inflation).

"And I'm writing this while far far away from ny on vacation."

Chicago?

Jim, if you think that having to rent to new tenants at 20% less than existing tenants are paying is a sign of a "strong market", you really don't have a clue.

As for the points made by the other posters, all have a degree of validity, but you have to remember that "landlords" is no ONE person: there are many, many landlords and a lot of different views, policies, etc. on how they handle these situations. One thing to note: does anyone here really think that a landlord will send every renewal out at the "current market" rent if it is below the rent currently paid? To me, that makes LESS sense, in terms of "doing it right". In the OP we see "In the lease renewal they offered us the same rent for a year lease"; don't you think this is the most logical starting place? A lot of tenants are not people who spend time on SE or even reading the NY Times or other paper's Real Estate sections because they couldn't give a shit in general about RE: it's not their business and it's not their hobby. So if they get a new lease with no increase, they just sign it and send it back happy.

The difference is when someone "calls them" on it and what they do then. From the LL's point of view, they know there is a cost to you moving - and it's not just the hard moving costs like the $1,500 jason posted; unless you put $0 value on your time, there's lots of "cost" in terms of disruption of your life, perhaps needing to buy new/different furniture / art / whatever; changing your address on a tons of different items (like your driver's license/registration, credits cards, or anything else which still operates by snail mail). There's also a good chance that you'll be moving far enough that you'll be changing things like what dry cleaner you use, where you rent DVD's, where you have your shoes fixed, and the PITA of finding the best one in you new area. And LL's know about this, and each one builds in a different $ level of "pain" which they think tenants will tolerate and stick to their guns about adding this $ amount to the "lowest currently available" rent they have.

Her's another log on the fire: I don't know if I've seen anything current on this, but quite a while ago Psychology Today Magazine did an issue on "stress" and one thing it covered was the most stressful events in people's lives. At least at that time, above "death of parents" and several other things which you would think would be more stress, "Moving your primary residence" came in at number one.

You also have to remember that a lot of "old school" LL's are still, as a fairly savvy attorney turned RE investor and LL put it, "can't get out of the basement". What taht means is they have been doing this for decades and can not get over that things have changed, and the main objective is no longer to have as much turnover as possible to get you RS vacancy increases. This impedes their ability to make logical revenue optimization decisions.

to riversider, your example of "To put this in terms of an example in a building with 100 units and annual 20% turn-over, assuming 10% renew and 10% walk, only the 10% need be deeply discounted. The building would be foolish to renew all 20 at market rates if history shows half will stay. In creating the multiple price points the building maximizes revenue." really doesn't make sense to me. If you say "20% turnover" the generally accepted meaning is that 20% of the units have new tenants, so the following "assuming 10% renew and 10% walk" is incongruous with the premise. If you didn't mean "turnover", but instead the percentage of leases which come up for renewal, in the vast majority of buildings that is somewhere between 50% and 100%, because most buildings only offer 1 or 2 year leases (so you do the math). Now, IF you are talking about buildings with mostly below market RS/RC tenants, then de facto a huge percentage of tenants auto-renew, and you could have a situation where that 20% was the number of non-RS/RC below market leases which come up every year, then that is more of a possibility.

TWIN: The landlord possibly could have begun eviction proceedings, but they already had a security deposit which covered 1 of the 2 months I owed them. Remember that I did give them a check each month, they just chose not to cash it. Also, remember that eviction takes alot of time (NYC is still the most renter friendly system around), so the landlords know that it is in their best interest to "work it out" (if possible). Also, note that the difference in rent is not that much in "real" terms over the 2 month period. So, if possible it benefits everyone to just work it out and negotiate.

I do not mean to bash Glenwood. they are an excellent management company and they maintain their buildings wonderfully. I just believe they need new people handling their renewals. The senior person in charge of the renewals is obnoxious and rude. I know several people who choose to not deal with him at all. That is the only complaint I hsve with them or the building I live in.

30 read more carefully. The op was paying 2006 rent. In harlem. The point is this, management co's big or small don't like to discount current rents. In this market they don't have to. I don't see any posters here (unlike last year) talking about voluntary reductions. You're too long winded on top of everything else.

Yes, 30yrs. You're too long-winded and should learn from Hones. Stick around, and one day you'll be a successful rental broker like him, able to badger and spew profanity on strangers non-stop.

BTW, you weren't on this message board last year, remember?

Oops...

nada, don't forget his four sales listings. he's got depth.

I read this board to learrn about NYC real estate. There are a handful of posters that I wish would be "long winded" and a bunch that are so ridiculous I just refuse to read them. 30 Years is in one of these groups and hones is in the other.

"30 read more carefully. The op was paying 2006 rent. In harlem. The point is this, management co's big or small don't like to discount current rents. In this market they don't have to. I don't see any posters here (unlike last year) talking about voluntary reductions. You're too long winded on top of everything else."

{Insert line from Jack Nicholson's character Melvin Udall to Greg Kinnear's character Simon Bishop's maid Nora (played by Lupe Ontiveros) here}.

*I* should read more carefully? Let's see the OP states they moved in 4 years ago (congratulations! You got ONE fact right! It must be quite an interesting experience for you). They state that they "current rents" (ASKING)are 1500 to 1650. Where are they, or where is anyone (including the OP) to "discount current rents"? (your words).

"In this market they don't have to."
Well, the EITHER the rental market isn't so robust and rents have/are significantly falling ( which you say isn't happening) OR the LL IS discounting current rents (because for rents not to be falling, they would still be leasing at the rates existing tenants are leased at). Well Bucky, pick one and stick to it, because it CAN NOT POSSIBLY be both.

PS "You are too long winded" = "you make it hard to spout bullshit when you list so many facts" (or "I can't understand you with my limited grasp of the subject matter"). You have now been placed in the Special Olympics internet joke category for me, so no need to respond.

PPS Is you math so bad that LL's talking away rent concession which amount to around 8% (or at best 16%), but also drop rents by 20% to 32% still construes "market strength". I don't know of any strong market with net effective pricing at 4% (in "The Perfect Storm" case) to 24% price evaporation. So again you are setting up straw men to knock down with any real grasp of the total bottom line picture of what is actually going on here.

Hi, OP here. The building is a mix of older RS tenants and younger market rate tenants. This is the same complex where Rangel and Paterson have RS apartments. Just from my own experience searching for a new apartment over the last month the rental market isn't horrible. Before we signed our lease there were at least 4 other no-fee apartments that fit our criteria - price, location, and amenities. All 4 offered some sort of concessions whether it’s free months, low/no security deposit, realtor fee payment, discounted utilities, etc. Given our experience with the current landlord we didn’t even consider buildings without incentives. Usually the deciding factor was if the apartment was only available for immediate occupancy or the GoNoFee people whose application requirements are a mile long and stopped short of an anal probe. Again, from my own experience I see there are deals out there, you just have to look.

I can’t attest to the stress of moving but in terms of time our last move took a weekend to pack, a day to move, and unpacking slowly throughout the following work week. A possible additional cost I’m expecting is some of our delicate IKEA items not surviving another move.

One thing to add about any news media story I've read is that they always ask brokers and realtors about the current condition of the market, and write the story accordingly. And guess what? Everything is always going up up up. 2 years ago, 6 years ago bubble or not. Although NY proces arent like FL or AZ's but still. At the same time being that I sublease cheap -- I don't know what rental prces are doing.

stick-man good for you. But a price you pay besides your cheap rent is a nomadic lifestyle. Don't forget that "cost"

PMG -- well how much is it?

You're living life like an animal in manhatan anyway. i worked on Madison Ave. for a 1.5 years. You have rabble any which way; even a smelly cab is not so great in my view.

And PMG what does that have to do with anything? You have something to say or evidence about my comment or just attack me personally

stick-man, you sound like you might prefer a gated community somewhere. Don't forget the interesting achievers, dreamers and strivers you get in the mix in NYC. Try the relative tranquility of the Broadway / RSD corridor (106th through 116th). It's a beautiful stretch. Columbia University is a major landlord. It's clean, young and relatively affordable adjacent to Riverside Park. You might actual smile and forget the rabble.

stick-man, I wasn't attacking you, just pointing out the flip side of having a $1200 sublet (from another OP)

So what is the cost? $250 for the move? I never subleased before. And after I loved out out an apt that i lived in for years -- I realized how much useless crap i accumulated and make a point to not do the same. if you have a comment about what i said in this make it if not make it in the other thread. sounds like someone is paying too much for housing. srves you right for moving here from oklahoma. do us a favor and go back.

stick-man I pay less than you for a better apt. so I think I have the experience to offer advice, but thanks for the kind sentiments. I've never moved for less than $800, but have paid considerably more. In this economy, check craigslist, or the classifieds of students at NYU or Columbia looking for work.

PMG
8 minutes ago
ignore this person
report abuse stick-man I pay less than you for a better apt. so I think I have the experience to offer advice, but thanks for the kind sentiments. I've never moved for less than $800, but have paid considerably more. In this economy, check craigslist, or the classifieds of students at NYU or Columbia looking for work.

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unless of course the building you are moving into requires insurance certificates from real moving companies and not out of work artists.

inonada
2 days ago
ignore this person
report abuse "And I'm writing this while far far away from ny on vacation."

Chicago?

who vacactions to chicago? picture sunnier, foreign, tropical. not the carribean.

Burma?

this hemisphere. ¿hablas español? not mexico. you wont get it dont bother

daytona beach. maybe something near an oil spill, lots of spanish spoken in the gulf area.

do you think it's wise to be on vacation right now? the rental market is hot, hot, hot after all.