Tales from the Rental Market

Ph41, I use SE. This latest round I got worried that they may be missing listings because they started charging in recent years. So I backed my SE search with looking at the major ~5 broker sites / REBNY feeds too. Something like less than 5% wasn’t showing up on SE. None of them were remotely close to my see-in-person shortlist. I concluded that if the broker wasn’t listing on SE, it’s because they knew they had such a turd of pricing relative to market that they didn’t want to bother paying SE a few dollars a day for six months while the listing just sat. All the more telling because even six months of SE fees would be a small fraction of the broker’s fees.

Long story short, I’d recommend looking at SE exclusively if you’re in the higher-end condo rental market. Mileage may vary in other markets. I personally don’t bother with rental buildings — overpriced relative to condos unless you only expect to be there for a year, in which case a couple of free months (16%) and no-fee (15%) might make it worthwhile. I’ve seen perhaps one decent listing in ~15 years.

I think you're less likely to see a major landlord say to their broker "F*ck it, let's just get it rented" than some rich person who owns one or a few units and is tired of the headache of dealing with it. Isn't that the biggest source of higher end good deals for rentals?

30, I think it is really a combination of the following:
1. Demand and over-supply issue at the high-end driven by new construction
2. Larger footprint of luxury condos given the bedroom count. Rental landlords do not build many units with more than $15k rent as they realize rent per sq ft is higher if they try to squeeze max number of bedrooms. Smaller foot-print basic luxury condo 1/2 bed rooms are not really at a tangible discount to the rental buildings.
3. Majority of renters not wanting to spend more than a certain $ amount for a particular bedroom count.

Thanks inonada.

You’re welcome, ph41.

I don’t know what it is, 30yrs. There’s probably some of what you say. Also, rental building owners tend to be in the business of yield rather than telling themselves / their investors to bank on appreciation.

I don’t actually think this is solely a high-end issue, 300. Even comparing $1000 ppsf 1BR condos to their rental equivalents, it happens: you can find the condo renting cheaper. Or else for the same rent, the condo will be nicer/bigger.

From the demand side, I’d say I think rental building tenants can have:

1) An irrational reaction toward paying broker & condo fees despite the financials. E.g., they refuse to do it “on principle” despite the economics.

2) Difficulty planning around the expected case. Sure, every sign points to them being in an apt for a few to several years, but what if they only stay there one year?

3) An inflated value of worth of the rental apt. While they don’t equate their $1000 ppsf rental with a (say) $2000 ppsf condo, they might do so with a $1300 ppsf condo. So ignore the finishes all around: bathrooms, kitchen built-ins vs standalone units, window AC units vs in-wall, solid doors, etc. I’m saying this distinctly from a notion of “Yes, it’s better but I don’t value it / care to pay up.”

@nada not quite a nubie, but it's a long story. Here's the short version.
The girl I was dating with a peroxide mohawk, brought me to brunch to meet her parents, I think I was 17 maybe 18... Turns out they were Geraldine Page and Rip Torn, you may not know who they are, I didn't either at the time... And that's why they loved me so much! Lol. Not too long later we were married and while still teenagers had a child! Life was very interesting for those 12 years of marriage, a great education as I traveled around the world to various film sets and hung out with everyone from Happy Rockefeller to Paul Newman. We were the cute punk rock couple with an adorable little boy, at fancy cocktail parties on 5th Ave and at Oscar parties in LA...

I was bouncing around City college, and wound up entering a program called and accelerated law degree program. Took some doing to get into it, but wound up deciding it wasn't for me, family friend said you'd hate being a lawyer! I tended to agree. One of my elective classes was in real estate (1985?). I thought that sounds like a fun way to make a living, and it would suit my lifestyle as we traveled quite a bit with my mother-in-law, so a flexible work schedule worked well for us. My first job in 1987 was for a company called spectrum equities on the Upper East side, learned a lot but didn't really make any money. The owner was mostly or had mostly been buying insider rights from renters in buildings going co-op.

Right after that I worked for a company called jrd management converting rental buildings into co-ops in Ditmas Park Brooklyn, the schedule was a little more regimented, worked there for about a year and then moved on. definitely learned a lot there as well, it was fun and I discovered Flatbush Brooklyn, Ditmas Park and Kensington.

Got back into real estate in 1990 and worked for a company called ji Sopher. Think of every negative stereotype you can about real estate brokerage, this is the company that started it all : ) I think 30 and I worked here at the same time, although he was a manager and I was a rental agent that worked every few months.

More or less I stayed in real estate as a way to make a living to support my lifestyle until 2007. I certainly didn't view it as a career, 90% of my income was derived from renting apartments mostly to social acquaintances and friends. So I was pretty sheltered from the realities of the real estate business.

It wasn't until I found Streeteasy that I realized how many people despised the real estate business. That's what encouraged me to start my own company. When I started the Burkhardt group in 2007 I was only doing rentals. And rather than the 15% fee model, I more or less charged people based on the time I spent with them, and the fee was never more than one month's rent. I didn't do many cobrokes with other agents, I focused on rental buildings and of course all my years downtown I had a handful of friends that allowed me to rent their apartments, this included Gottlieb who had a number of rundown but cheap properties throughout the West Village.

In 2009 a friend came to me that was working with a pretty big time broker, he hated the process, the amount of money the broker was going to make etc. To be fair he didn't care for the broker much. I had rented him and his wife their last apartment but told them I didn't do sales. Long story short he persisted and asked me to put something together similar to my rental model for his purchase. I wound up selling him a penthouse in a small new condo building in Cobble Hill(they still live there), and wrote my first rebate check.... And as they say, the rest is History.

Loving what I was doing was the impetus for actually turning real estate into a career and building a successful business.

Keith
TBG

You’re making all the rest of us sound boring, dammit!

Any new predictions for post Labor Day?

Nah, not from me.

FWIW, SE’s total rental inventory for July was about the same in 2021 as it was in 2019. Right now, it’s showing 15.7K total listings, which is the lowest I’ve seen this summer.

The sense I get from my building, the streets, and buying/renting activity is that everyone and their mothers are coming. Lots of anecdotes of sloppiness. E.g., some story about a foreigner trying to secure an apt for his daughter to go to design school. Rents were so high / places hard to come by, that they ended up buying a place for her to use instead, to the tune of $2-3M….

I still think hibernating until the winter is your best move at this point, but I wouldn’t expect anything close to last winter. In the meantime, perhaps George can regale us with stories of Admiral Stockdale once more…

4 days after my last post of 15.7K total listings, it’s now showing 14,957 as of today (Sept 1).

My one lone tale from a recent rental experience. A friend's daughter will be going to New York law, they live in Palm Beach and were having trouble navigating the NYC rental market. I connected them with a good friend at Corcoran, thinking how hard could it be to find a $3,000 studio. Apparently very difficult. I was surprised at the sort of crap they were looking at and everything that that sort of fit the bill would require a brokerage commission.

He was also considering buying out of frustration. I advised him not to as to not become another parent saddled with a mediocre property after the child moves on.

This was a couple of weeks ago. I'll probably be seeing them this weekend and be interested to get the update.

Yep, it's kinda gone nuts. Here's a pick from my bell weather rental building:

https://streeteasy.com/building/prism-at-park-ave-south/18l

A 680 sq ft 1BR now asking $6K. Asked $4.5K last May, would have been below $4K last winter based on other units in the line. Pre-covid last asks were $4.75K in 2015, 2017, and 2018. No idea on concessions at the various times.

As another anecdote, my building had a unit similar to mine but slightly inferior (with a bunch of weirdness) last asking ~2x my rent. It had been on the market for a long, long time but then flipped to "rented" in July. I was skeptical at first (maybe it was just being pulled, maybe the owner was moving in, etc.), but then the elevator showed up as reserved for the beginning of Sept. I guess it could be the owner moving in still, and if it rented it probably went with a significant discount, but nevertheless a sign of the times...

New thread at https://streeteasy.com/talk/discussion/46963-tales-from-the-rental-market-part-2

Geez . Is this the longest thread ever ? ? ?

longer now :)

Bumped into a guy at a networking event who recently moved here to NYC from somewhere in the Midwest. He works 100% remotely at a CA firm, and chose to live in Manhattan (got a sweet price on an apartment in Spring 2021).

Goes to show that people are not here to work, being called back to the office, they are here because this is the nicest walkable city in the US!!!

"George,
I think I pointed this out a year or two ago, but I think actual infrastructure (like 150 year old water mains, a cantilevered highway which is a major artery into Manhattan, etc) are crumbling with no real plans and certainly no funds to fix them."
https://www.nytimes.com/2023/08/29/nyregion/nyc-water-main-break-subway.html

inonada,
Any idea what your previous apartment rented for to the next tenant, relative to the last rent you paid?

My previous apt was sold, not rented. It was a late 2020 pandemic deal, so I’d guess it would rent pretty easily at 1.5-2x what I paid today. My two-prior apt rented several months ago within 9% of what I last paid there (pre-pandemic rent levels, same as it was in 2014 when I started).