Buying Apt with Rent Controlled Tenant?

The tenant has the right to remain there indefinitely, regardless of major upgrades. Tenant might even have right to pass apt. along to member of family, but that I'm not sure about. Is the tenant rent controlled or rent stabilized? There's a difference.

Probably, no, no, not ever.
You really cannot count on taking possession of a rent-controlled apartment anytime soon. The amount you get is what you get, the city doesn't pitch in because it's RC. It is possible for a caregiver or family member to inherit the rights if they were living with the tenant for at least 2 years prior to his/her death.
Buy it for your grandchildren or for fun (if you're into S/M mind games.)

You could propose buying the tenant out -- which is essentially buying the lease from the tenant in exchange for tenant vacating the unit. Some rent controlled/stabilized tenants would move if they could afford it.

If you have no experience, this is not the investment for you. The play for these is long term holds and/or buying so many that the (very) low % of ones that do turn over will make you a profit (in theory).

However, be advised that your potential tenants are sure to be 'professional' tenants, keeping their 'job' of holding onto their apartments. For many of them, it is more lucrative then their real jobs, as their salaries are capped and their apartments can be worth more to them. If you are not a professional landlord, this is not for you.

Bad risk for the most part. Has anyone ever known a person who purchased one of these and had a good experiance? Come to think of it, there must be a positive story regarding this, only I never heard one.

Don't let them scare you. Consider it re finance 101 in nyc course.

The legal aspects of it is free. So is the social lessons. Might learn about WWII. Geriatric care. Tenant LL spying is fun. And a crash course on pricing for hit men.

An education in financial fortitude, priceless.

"Does the tenant have the right to live their indefinitely"
yes & possibly the next generation, so the place could remain RC for the next 50 to 100 years.

Unless you're an expert in rent control/rent stabilization matters, do not do this.

"Does the tenant have the right to live their indefinitely, unless I do major upgrades?"

you do not have the right to make upgrades. You cannot increase rent of an occupied apt w/o tenant's written permission.

Would you mind sharing how you found out about this "great" investment? a broker? Friend?

Both rent controlled and stabilized tenants can confer succession rights on relatives,
(late-in-life or end-of-life) spouses, and even adoptees.

A guy in France did that and his tenant turned out to be a woman who lived to 114! Made the guiness book of world records and long out- lived him!

I agree with MAV and others who say this is a pro move. This is not for the weekend warrior investor.

The reason is, there are a lot of technicalities and many variables to consider--these are complex investments--and therefore they are high risk. What you don't know can really hurt you.

However, yes, I absolutely know of people who have done great financially with these units. And they are advertised on Streeteasy and other places, they are not secret by any means. I bump into them by accident from time to time, when I am looking for something else.

The OP seems deeply confused about RC. Unlike, say, the mortgage tax deduction, RC is not a welfare or subsidy program.

RC tenants have extensive property rights to their apartment, although with only limited rights of transfer. The landlord only buys the residual, which don't include occupancy rights in the ordinary course. Landlords do have a statutory right to a reasonable return, but that doesn't necessarily mean a reasonable return on an unreasonable purchase price.

Be sure you understand the limited rights you are buying and price accordingly.

>RC tenants have extensive property rights to their apartment<

True. RC tenants (& possibly their occupants) essentially have life estates. So, apt could remain RC for 100 years if it's passed on from tenant to co-occupant via succession.

Not sure how big the building is, but if you buy the building you can kick the tenant out of you plan to live in the apartment. I'm not sure the details, including whether you haver to use the whole building or if you can just use the one apartment. Regardless, expect a legal fight. Cases I have heard of recently have all come down in favor of LL, but it costs a lot of legal fees.

downtown, don't give advice if you're "not sure about the details." As MAV said, expect the tenant to be very sure about the details! You cannot "kick out" a RC tenant to occupy the unit.

Passing down rent controlled apartments is SICK - property rights gone wild!! How can the rent be less than the maintenance expense that the owner has to pay??
Why would someone want to buy such a property and inherit parasites such as RC tenants?

What if the tenant accidentally fell down the stairs?

Parasites? What are you, some kind of Stalinist?

Unlike bubble-era landlords, who got rich simply by straight transfer of wealth from their fellow New Yorkers, current RC tenants worked for their property: everyone of them lived in the city through the bad years or inherited from someone who did (vacancy decontrol went into effect in the 1970s).

And, bobnay, since RC landlords are entitled by law to a reasonable return on capital, the only way that they could be paying more maintenance then rent is if they agreed to do so -- usually as a limitation on the windfall profits from converting a rental building to coop/condo. If you buy a RC unit from the developer, you are bound by that agreement for exactly the same reason that the current holder of your mortgage loan is not entitled to unilaterally increase your principal balance and interest rate.

Maly , downtown is correct. If you (as a person and not as a corporation) choose to live in (and you must live there) a rent controlled unit, you do have the right to issue an eviction based on owner occupy. But, you should expect significant legal fees and a tenant oriented court system.

Oh and for the record in both my property management and attorney capacity, I have NEVER met a rent controlled tenant who was not a parasite. Flame away.

dealboy: lol.

>financeguy
about 2 hours ago
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Parasites? What are you, some kind of Stalinist?

They aren't parasites, so long as they don't have second homes.

>Unlike bubble-era landlords, who got rich simply by straight transfer of wealth from their fellow New Yorkers, current RC tenants worked for their property: everyone of them lived in the city through the bad years or inherited from someone who did (vacancy decontrol went into effect in the 1970s).

RC tenants who lived in their place during the bad years --- absolutely.
Those who inherited from someone who did --- why? What possible justification?

You cannot evict a rent-control tenant or a 62(?)+/disabled RS tenant under owner occupancy laws. Look it up.

There are significsnt limitations to owner's use and occupancy evictions. NYC10023
is correct: people over 62; tenants with disabilities.

In addition, regulations promulgated by the Attorney General which have the force of
law prohibit eviction of rent stabilized and controlled tenants in coops and condos
for an owner's use and occupancy and are part of the proprietary lease of aevery
post-1982 coop and condo offering plan,