way below market but with rent stabilized tenant

I know somebody who bought such a property, all cash, and all I can say is DON'T DO IT, superwoman!

When she purchased, she broke even (or maybe even came ahead a little); however, since then, the maintenance has increased triplefold with continuous waves of sizeable assessments--while the rent stayed at the rock bottom. So, this ownership has been draining her bank account. She's been trying to sell at a loss forever, but she hasn't even had one offer. As though that weren't bad enough, her coop board won't let her price the unit too low becaues they are concerned that doing so will compromise the resale for the entire bldg.

Now, that's not even half of the story.

The long-time rent-controlled tenant, a single guy, has a relative who has presumably lived with him off and on (although my friend doesn't believe s/he ever actually lived there). Now the relative is asking to be placed on the lease and, although it might sound crazy, s/he may supposedly have the legal right to inherit the rent controlled lease because s/he claims that s/he has lived there for more than an X number of years as a blood relative!!! My friend is totally screwed because this illegal and/or "phantom" resident seems to have earned the legal right to be placed on the lease because of the "de facto" residency. It sounds crazy, but that's apparently how tenant-friendly the NYC rent control system is.

RUN THE OTHER WAY!!!

THANK YOU NYC212, I have no idea....scary indeed.

the next tenant doesn't need to be related to the current tenant at all: under NYC law, any one lives with the current tenant during their last year of life will automatically take the rent-stablized apartment

and that's easy to do, they just need to change the con ed bill to the next tenant's name now, then this new tenant has 90% chance to win if the landlord brings him to court trying to claim back the apartment

If you are not a professional landlord with hands on experience with RS tenants, both personally and legally, I would stay far away from these.

They are for companies who both know what they are doing, and buy enough to aggregate the portfolio. The idea is that if you have enough and 1 turns over every X years, the math should work out. The BIG question is what X is...

It's amazing how many NYers really have NO IDEA how rent stabilization law (and/or reality) works, and falsely think it protects the 'middle class'

BTW, I would not touch this investment type, and I have experience managing buildings which have some stabilized apartments. I could not imagine dealing with a co-op board on top of the tenant!

Good solid advice from all of the above. I have spent several years explaining this to people I know who were entertaining this kind of disaster. If anyone has a positive story about this kind of purchase I would really like to know that somebody somewhere had a good experiance. On a cheerful note; Richard Kind is an actor who had a stabilized studio on West 72nd and I saw him on a late night talk show a few years ago bragging to the host how he didn't live there and placed actor friends there for years. He lost the apartment and I am sure his landlord was seen dancing up and down 72nd Street.

"the next tenant doesn't need to be related to the current tenant at all: under NYC law, any one lives with the current tenant during their last year of life will automatically take the rent-stablized apartment"

... completely WRONG. Must be family member or in a marital-like relationship (similar to common-law marriage) with evidence to prove it (financial entanglement, domestic partnership registration, extended families interaction, et c. And it's generally last two years of life. And other requirements.

Listen to MAV. He nailed it.

Any insider information the current LL/Owner has anyway? You think you are going to buy the apartment and then try to buy the T out, good luck.

If the price is incredibly, incredibly low, might be worth doing. caonima - does have to be a relative, can't just be a roommate. Having managed many rent stabilized/controleed apartments, tenants are always trying to pass these along to relatives. Can be a real nightmare for landlords.

Thanks everyone for the feedback !

If you knew how to get in touch with the tenant, you could have a conversation with him and see if he was amenable to being bought out.

For a lump sum, some tenants might be willing to leave.

If you really liked the apartment this might be worth trying. If the apt is listed at $40k below market but the tenant agrees to leave for a payment of $40k, you could end up with the apt for a market price.

Of course you can't finance a payment to the tenant, but if you have the cash you could do it.

Thanks GraffitiGrammarian, that would be an option if I plan to live there myself. Since this is a coop, I am pretty sure they won't allow me renting it out after the RS tenant moves out.

analfart, now i know why you are grey-out, you lie and mislead people

tm2mc, you are wrong. no need to be related at all, could be strangers by law. go search for court records yourself. i'm suroprise so many people don't even do a quick search

Check #8 in the rent stabilization rider. It is only family members.

The courts look at all kinds of factors when determining what "family member" means in a particular case. E.g., they recently let a guy succeed his father's ex-girlfriend because the circumstances supported it. In another recent one, it took the tenant two appeals to finally get a 3-2 ruling that he could succeed his girlfriend.

Being able to keep renting it out once the tenant vacates depends on whether you get Holder of Unsold Shares status from the seller. Probably won't for a one-off sale, since the seller has to vouch for your financials, etc.

As MAV said, stay away. If the tenant was buyout-able, the seller would've done it already.

>Thanks GraffitiGrammarian, that would be an option if I plan to live there myself. Since this is a coop, I am pretty sure they won't allow me renting it out after the RS tenant moves out. <

But you could get around this by negotiating sponsor rights as part of the deal. That way you could continue to rent out the apartment unless/until you decided to occupy it yourself--then you would lose sponsor rights.

Why not try the trick where you move in yourself?

The law doesn't permit the sponsor, or someone the sponsor sells to, to evict the RS tenant for personal occupancy. All either can do is wait, or hope the tenant slips up and loses RS status.

SWE: Owner occupation works in situations where one buys the entire building, and claims use of RS (and non-SCRIE) apts for use. Google Economakis and rent-stabilization.

1. I like stabilizedc ooops as investments
2. you and your tripled maintenance friend are welcome to e-mail me
at bookwormslh62@yahoo.com

renters are creeps