Renting out a 1br

Landlady tip: you'll need to switch over your insurance from homeowner-in-residence to landlord, and you'll probably want to up the amount of liability insurance you carry.

ali r.
DG Neary Realty

No one else find OP's questions/situation a little disturbing?!

How so, Sunday?

inonada, one would expect such questions be answered *before* buying the place as an investment, no?

I am disappointed in you, Sunday. All this time on SE, but so little to show for it. You are dealing with forces you cannot comprehend because you ask for "reason" and "logic" from it.

I like the part about rental "income"!

oh inonada, I have accepted it, just as I have accepted war and murders as a reality of human nature. Still, I find the images of dismembered, dead bodies disturbing. Once in a while I have to cry out and ask see if I am alone.

Good answer ;).

How is this disturbing? I want to rent my place out, never done so before, so I'm here asking how. What's the big deal?

Btw, Alahart, 'rental income' is the actual terminology used for tax purposes. Google it.

Btw, I don't understand why people here have to be so sarcastic and unhelpful... I didn't think there were this many trolls on SE.

i suggest you use a broker your first time renting an apartment out.
it costs you nothing and they will handle taking photographs, showing, tenant screening, applications, credit check, generate a lease and help coordinate showings.

If your apartment is below 34th street or in Brooklyn, I would be glad to meet for an interview, otherwise I suggest you look through streeteasy in your neighborhood and see what broker has done a good job with their current listings.

if you have questions, don't hesitate to email me at snezanc@gmail.com

Sorry, alphataru. I have no experience in renting out an apt in NYC so I cannot be helpful to you on that front. Look at other threads where I have given useful information, and ask yourself what help you've brought to this forum. You just seem to ask a lot of questions yet provide nothing in return, which is your prerogative, but sometimes you should think about giving something back.

Sunday is disturbed by your behavior because it seems that you bought a place as an investment property without first figuring out the answers to the questions you are asking. To her (?), these seem like important questions that should be asked before a purchase is made, not after. She thinks that any reasonable person would have done this and is disturbed by the fact that you hadn't. She worries for you because it seems to her that you stepped into an investment without understanding it as a reasonable person should. I gently reminded her about the apparent lack of reason demonstrated by so many people on SE over the years. Now, we may be wrong, but that's how it appears to us.

Now comes the time you can be helpful to others here. Why didn't you figure out the answers to those questions before you purchased? Except for the license thing, they all seem like they would affect the bottom line of your investment materially.

alphataru, snezanc is correct that the first time use a broker. They should explain the in and outs and take care of what snezanc mentioned. I have rented out condos in the city for years. Make sure you acquire landlord insurance and the condo should be in an LLC to protect you personally. There is no license needed, management company is not needed as long as you want to collect the rent yourself and take care of problems in the condo and tax wise you need to file for state and federal the income or loss (alarhart). Congrats on your purchase.

"it costs you nothing"

Amongst the stupidest words ever put together by brokers. Of course it costs you something. Most renters have an unreasonable aversion to paying a broker's fee. Many will flat-out refuse to consider broker fee apartments on principle. Others over-price the cost of the broker fee. In my experience in the rental market (which is pretty high), the amount of rent you lose for having the renter pay the broker fee is 10% annually. That's how much of a discount the market demands over no-fee apartments. If you do go the broker route, it is better to pre-arrange a lower fee that you will be paying yourself, say 1 month or 10% or whatever. You'll come out flat the first year, but will be 10% better-off in subsequent years as your rent will be higher.

As a renter, I BTW have always preferred broker-fee apts. Can you guess why?

I think the question is why would you buy an apartment as an investment without first running numbers to see if it even makes sense. Do you know whether or not the monthly rent will cover monthly costs?

As to taxes if you are making above a certain point ($150,000 if married) you will not be able to deduct the full amount of taxable loss, assuming a loss situation, as it will begin to phase out. as most of the time you will have a loss, including depreciation, unless you actually have positive cash flow, then this is potentially a bad investment.

As to LLC, you would have needed to do that prior to buying the apartment. If you have already closed and taken out a mortgage you would need to get the bank to agree to transfer title, along with the condo/coop.

We have always gone the no broker route when renting out our apartment. The one time we used one, which was the last time, was a disaster. Broker was not so proactive, even though we paid the fee and because the market was awful we had to drop the rent and we could have found someone at that pricepoint, but were forced of course to pay the brokers fee. It is not overly complicated to rent on your own, it is just a question of time.

alphataru, bottom line, we are all smarter and better than you, and we all want to let you know of that fact.

In truth, I had the same reaction as several posters, but I figured why bother lecturing you since what's done is done.

With that behind us (or not), I'm with inonada's most recent post which suggests that you consider paying the fee. A broker will still be thrilled to take your listing, but you've lessened the friction (broker fee) between you and your tenant (the relationship that continues) by pre-negotiating and choosing to pay and include that detail in your listing.

alphataru can save face by coming back and explaining that he bought the apartment for his own use, without investment/rental in mind, but his circumstances have changed -- he's being expatted to Peoria, moving in with his in-laws, divesting himself of all of his non-condo worldly goods and living a simple life in a monastery -- and so he wants to understand a few practical implications of renting out the condo instead of giving it to his in-laws.

alphataru - I'm a landlord/owner and a broker - if you want free advice, email me: vlee@ccrny.com

Jurors who convict a defendant of all charges might not have been helpful in the eyes of the defendant, but their service surely contributed to society.

alphataru
your situation is nuts! who advised you to purchase investment property? whose services did you use during the puchase process? none of these people expressed their concerns about your ignorance?

alphataru --

I think an underlying assumption here is that perhaps you have not worked out the math on your investment.

This may be an unfair assumption, but the fact that you have not worked out the nuts and bolts of how to start the cashflow on your investment suggests that you may not have done all your homework.

That's the reason for the sarcasm. You could go a long way toward stamping that out if you return with a post saying something like, I already crunched the numbers and I expect my rental income to cover 80% of my mortgage carrying cost, which is what I expected and is ok because tax savings make up the rest....or something along those lines.

http://www.muralsyourway.com/largeview.aspx?sr=MMMGSR1022.jpg

haha @ "it costs you nothing"... do you think the renter will not want to negotiate your rent based on the fact that he/she has to pay a broker fee? Ok, yes, you could wait around until someone accepts the fee and your proposed rent. How many months will that take?

OP: get an accountant.

since November, it hasn't taken me more than 3 weeks to find a tenant for an exclusive listing of mine and the vast majority of them rent in less than 3 days. Sometimes it's difficult to arrange access so there are one or two exceptions. My apartment on Suffolk street was one. I had the listing since April 12th but couldn't showing until April 28th. It took 14 days to find an applicant.

I always charge a broker fee and I find excellent tenants for my clients.

It has never taken me many months to find a renter for an apartment. If that was the case, I would be doing something wrong and would happily forego a broker fee to retain my relationship with the owner or give the listing to someone else.

You are more than welcome to generalize, as I am doing now, but facts are facts, I will find a more qualified tenant than an owner on their own. I can run background and credit checks they can't run and someone that can afford a broker fee has more disposable income than someone who can't. I hire professional photographers out of my own pocket to take pictures and market the listing to hundreds of other brokers, on craigslist, streeteasy and the NY Times. An owner would have to spend hundreds and perhaps thousands for a high end property. In NYC, there is absolutely no reason not to use a broker, unless you grossly overprice a property. .

kewl

Snezanc- why can't the owner run credit and bg checks? How does being wiling to drop several extra grand on a fee ensure they have more disposable income? It could just mean they aren't inclined to do the work themselves....

Racerdave: A controversial comment like "someone that can afford a broker fee has more disposable income than someone who can't" would be proved by collecting data from renters which shows the disposable income of both renters who pay brokers fees and those who don't.

A semi-intelligent broker making this statement would provide a link to either a study or their collected data. A stupid broker would make the statement and expect people to believe it, despite it seeming so ridiculous. You make the call on what we're dealing with here.

And owners can run credit checks, there are numerous services. Besides, in my experience, the condo or coop is going to require much more than a credit check, they're going to demand bank accounts, employer references, salary confirmations, rental history, etc. There is little to nothing a broker ads here.

Thank you Goldie. By using a broker and have a FEE listing, the owner surrenders their maximum rent... So to say there is no cost to the owner who uses a broker, well, thats just b.s.

As for brokers ensuring they will find the best renters... yes, I am sure that is their first concern. rofl. generally speaking, of course.

snezanc, I'm not questioning the value you bring to the table. I'm questioning your claim that a renter wouldn't pay more rent to the owner if there were no broker fee. If I were an owner, I can assure you my income would far make it worth my while to make use of the services of a broker, but I'd be an idiot to think I couldn't gross more by doing the labor myself.

racerdave - because it's a federal law
goldie - i said can't, not won't.

inonada - you are assuming inelastic demand...

Sorry snezanc, I guess I missed your point. Are you really saying that owners are better off when brokers collect a fee because the renter would have more disposable income and is therefore more qualified?

I guess most of the rest of the world is doing it wrong and getting less qualified tenants by not charging upfront fees.