Good price - Gramercy

It will be virtually impossible to get rid of rent-stabilized tenants.

Also, my understanding is that with the new laws even if the current tenant leaves, you will need to get a new one at a similar rent. Naturally, there are exceptions and some way around it but they are much narrower than they used to be.

These laws apply even to individual owners? I cannot claim to be the next tenant myself?

If a new owner could simply force the current tenants out and move-in, then this unit would have sold by now. There is a reason this unit has not sold and has undergone a huge price reduction….

I know of a gay man 70 year old who legally married a 30 old woman to pass on the rent stabilized apartment. The owner ended up paying him huge settlement to move out. This is even before the new law back when you could make a rent stabilized apartment free market if the tenant moved out.

weird, this website says rent stabilized apartments are not in coops or condos.
https://portal.311.nyc.gov/article/?kanumber=KA-02346

These are leftover units from non eviction co-op conversions. Remember these co-ops were once rental buildings, and not all insiders (tenants)purchased their units when the buildings converted. These tenants continue paying rent, and the sponsor or current owner of the unit pays the maintenance, assessments etc.

Keith is correct. There are countless co-ops where rent controlled holdovers from pre-conversion pay peanuts for the same size apartments that their neighbor shareholders pay top dollar for. And there are numerous ways the controlled and stabilized tenants can pass down the golden ticket to others, such as in the case 300 mentions above.

BTW I would imagine the current owners have already tried unsuccessfully to buy out the tenant, hence the fire-sale price on the apartment. Plus, all you need to do is take one look at all that crap and clutter. Those tenants aren't going anywhere anytime soon.

Another way to pass rent-stabilized apartment to someone else is to have someone live with you as a care-taker for more than 2 years if I remember correctly. Then the care-taker becomes the new tenant if the original tenant dies or decides to move somewhere else. There are still carve outs to vacate such as by combining with a non rent-stabilized apartment upon vacancy. Personal use exception is not granted that easily. If the existing tenant is above a certain age, forget about all exceptions. They basically own (more than) the apartment and in many cases what they pay does not cover maintenance of the coop or pro-rated taxes in a rent-stabilized building.

Also, don't expect a timely 'natural vacancy' just because a tenant is elderly. Some of those alter cockers will outlive everyone else around them, including you. I mean who wouldn't want to keep on kicking with the best housing deal in town?

https://www.nytimes.com/1995/12/29/world/a-120-year-lease-on-life-outlasts-apartment-heir.html

An owner can evict a rent stabilized tenant to reclaim for their own use in most circumstances. https://hcr.ny.gov/system/files/documents/2020/10/fact-sheet-10-09-2019.pdf
If the tenant elderly or rent controlled then you’re SOL, though.

An owner can evict a rent stabilized tenant to reclaim for their own use in most circumstances. https://hcr.ny.gov/system/files/documents/2020/10/fact-sheet-10-09-2019.pdf
If the tenant elderly or rent controlled then you’re SOL, though.

They aren’t really giving this easily. If you just bought the property no way.
“An owner must establish an immediate and compelling need for the apartment for use as his or her primary residence or as a primary residence for his or her immediate family.”

“An owner must establish an immediate and compelling need for the apartment for use as his or her primary residence or as a primary residence for his or her immediate family.”

Not to mention if the tenant is older than 62 you'd have to procure for them similar or superior accommodations at equal or lesser rent. Good luck with that.

Ha. I have enough money to buy an apartment for more than $200k but I have a compelling need to move in rather than continuing my existing arrangement. No one is going to listen to that.

Why do these golden tickets exist?

These golden tickets exist because:

1. NYC residents didn't want to be forced out and asked local government to ensure that renters wouldn't have outsized rent increases decades ago. It is easy to say that rent shouldn't grow much faster than inflation in any given year, but decades of annual increases later it ends up with this crazy delta between controlled rents and market rents. Renters remain outsized portion of the voting class vs. landlords, so not surprisingly annual increases were probably less than they should have been.

2. When they were first making these policies, prices were so so so low and housing had such a bad outlook that this give away wasn't envisioned. People can live in an apartment for 35+ years, but if you went back to 1986 in these neighborhoods, nobody would believe that those apartments all rent for several thousand a month.

3. Once you make this promise, it is very very hard to undo. Sure there are some people milking the system. But it is also working as intended in that there are a lot of elderly long-time NYers on Social Security who would be screwed if rent control were fixed. It would be all over the news if the city allows them to be kicked out by 'greedy' owners.

Then there are re-instated golden tickets to the well-off, who happen to have a rent controlled apartment.

"With passage of the Housing Stability and Tenant Protection Act of 2019, effective June 14, 2019, high-rent and high-income deregulation is no longer permitted. For more information, contact NYS Homes and Community Renewal (HCR), the state agency which administers the rent laws."

https://rentguidelinesboard.cityofnewyork.us/resources/faqs/deregulation/

Can maintenance and taxes really exceed the rent? or does the landlord get to pay reduced taxes?

So what is this apartment worth?

Perhaps you can read the description in the previous listing. What will I pay? They will need to pay me but they will find a sucker who will actually pay for negative cash flow.
https://streeteasy.com/sale/1511248

Perhaps you can read the description in the previous listing. What will I pay? They will need to pay me but they will find a sucker who will actually pay for negative cash flow.
https://streeteasy.com/sale/1511248

The market for these kinds of units changed a lot with the Tax Reform Act of 1986.

This mess is why every apartment should be rent stabilized, combined with shifting the burden of property taxes onto vacant apartments and pieds-a-terre. The implementation of this is relatively straightforward: the base rate of property taxes is increased materially. If the owner of the unit files income taxes with that unit as their primary residence, they get a big homestead discount. (LLCs pay the high rate regardless.) Or they get the discount if they rent it at fair market value to a tenant who uses it as their primary residence. Combine that with universal rent control and NY starts to return to people who actually live here, not being a deposit box for foreign billionaires. Then the delta between rent stabilized and market starts to narrow. And people who want to have a second home in the city can; they just get whacked with the non-resident property tax the way I am whacked with city resident income tax.

Why not implement the above nationwide and tax every non-primary home? Even communist China hasn't been able to do that.

I wonder how many billionaires actually live in New York? I heard it was about 100.

To some degree it's just like it always was, on a relative basis. There are some neighborhoods that are just going to be too expensive for some.

I'm helping an old former client look for a place in Bay Ridge. It is a full-blown buyers Market, so far they've looked at over 30 very nice co-ops all listed below $300k. So you can live in New York City, perhaps you just can't live in Tribeca or on Park avenue.

Also plenty of cheap apartments in the '80s and '90s along 1st avenue. And still some really compelling deals as you move into Northern Manhattan, some great neighborhoods. I lived in Washington Heights about 15 years ago, had a beautiful apartment in a building known as the 'triple nickel'. Paid 1300 a month, great neighbors and easy access to my favorite Italian restaurants on Arthur avenue.

I'm really torn on rent stabilization / rent control. I get that it can be very important to families that require stability and who put down roots. I grew up in an apartment in New Jersey, it was important to my family to be able to know they could continue to renew the lease.

However I also don't view landlords as villains. It's not right that if you own a building and the market for an apartment is x but due to regulation you need to charge y, even though taxes, maintenance etc are all rising exponentially. There should be a calculation that an owner can do to at least make sure the rent being generated allows him / her to make a reasonable return on their investment.

It certainly a bit of a conundrum, capitalism that is.

Keith
TBG

Ha. George only proposes what benefits him rather than a steep National tax on second homes which will kill his money-making second home.

Keith, You make some good points about many areas in NYC still being reasonably priced while the nationwide prices are up 20 percent yoy. However, it will not satisfy people who just want to complain as they want to live in the best neighborhoods and buildings without having to pay market price for it.

George,
As far as I can tell in the last half century the population of NYC has barely gone up 5%, while in that same time period there's been a relatively lively amount of construction. Seemingly, however, housing scarcity has made large increases. It seems to me the most likely explanation is a shift to underutilization/commodification of housing assets.

I am scratching my head. Where is the scarcity whey the rental vacancy rate is high enough and Keith is giving examples of buyer’s market in certain parts of the city?

I am scratching my head. Where is the scarcity when the rental vacancy rate is high enough and Keith is giving examples of buyer’s market in certain parts of the city?

BTW commercial (especially office) space used to shoulder a significantly higher portion of the overall tax bill. But now politicians have not only shifted it more to residential even though office rents have skyrocketed, they seem intent on giving away huge tax breaks even though I think they've been proven unnecessary (Amazon has taken large amounts of space since they pulled the plug on LIC, Google has made huge purchases not only without a special deal but even turned down tax breaks, Facebook, etc. And we seen how wonderful an addition Hudson Yards has been to NYC vs the huge amount of money the city has thrown at Related).

Typically I like to browse through this site at night when I'm having trouble sleeping. Some opinions on some of the hot topics discussed here, supposedly backed up by research.

https://furmancenter.org/research/publications/eyJyZXN1bHRfcGFnZSI6InJlc2VhcmNoXC9wdWJsaWNhdGlvbnMiLCJjYXRlZ29yeTphcmVhIjoiNzEifQ

Funny. I was reading rental apartment supply statistics on this website last night.

This one. Some good facts here rather than posturing.
https://furmancenter.org/files/FurmanCenter_FactBrief_RentStabilization_June2014.pdf

Good neighborhood

Its really townhouses that rob the city of income.

When a 4 story townhouse with 4000 square feet is on a block with buildings that are 8 stories high and full FAR buildable rights to 8000 square feet, the city is losing out on 4000 square feet of taxes.

These are premium luxury properties and frequently pay less tax per sq ft than the average coop/condo apt.
They should actually be at a higher rate.
The tax code should be changed to reflect their tax bill based on their footprint being fully built out.

Truth,

What you say is true is due to tax cap on Townhouses 1-3 family in areas which were once very cheap but got gentrified.
- Most Manhattan townhouse are not that low vs Brooklyn Prime location townhouses. In some case, Manhattan non-prime location townhouses are more expensive per sq ft vs coops in the same location (Murray hill, Midtown or UWS may have some examples).
- Prime Village townhouses per sq ft are lower than near by coops per sq ft due to tax cap and sudden increase in value of townhouses in the last 15 years.
- Unused square footage is not always available to be built and you can make a case that when additional square footage is built, additional services are needed due to density increase - schools capacity etc.

Yes 300, I was more focused on my Chelsea neighborhood where there are many 3000 to 5000 sq ft townhouses paying $30k to $50k a year taxes, but have 2k to 10k sq ft of unused air rights.

These owners are often the ones with the juice to get their streets closed to cars for the open streets program, basically increasing their "front yard" without paying for it.

And if they really want to maintain the premium of their 4 story home, then they can sell their air rights.

Truth, In most case, their air rights can't be legally used due to height restriction on small width lots, landmark restrictions unless it is a corner townhouse and not landmarked. The air rights can only be sold to adjacent building and in most cases, there is no buyer either as neighboring stuff is already built up or the air rights can't be legally transferred due to various rules related to transfer such as air right transfer has to be to adjacent property. Will appreciate some examples of Chelsea townhouses with significant unused townhouses.

I'll pick an easy one that doesnt really out anybody as its been sold to a developer.

To be fair, its an imperfect example as it has ground floor commerical but the flipside of this is the ground floor commercial tenant would be apportioned a substantial part of the tax bill in its rent.

254 west 23rd st. Former east of 8th bar/restaurant.
currently 4700 sq ft with 13,870 sq ft air rights

tax bill is $50k
fully built, taxes would be an additional $147k

Yes. This is on the double wide street. Double wide street and avenue lots have higher FAR then the lots on a street block. So FAR is very high. For townhouses on the street, FAR ratio is smaller.

However, highly likely there are restrictions on building height on a 25 foot wide lot (Sliver Rule). I can't be sure without zoning analysis but townhouses on a normal wide street definitely get hit by Sliver Rule. From what I know, the only way to get full FAR will be buy adjacent townhouses and then the zoning will allow taller building.

More importantly, real estate taxes taxes are roughly based on property value (except in NYC). Unused FAR is not taxed as the used FAR, otherwise empty piece of land would be taxed a lot.

https://www.rosenbergestis.com/wp-content/uploads/sites/1101496/2021/01/2573697_1.pdf

ok , so lets go with random 230 w22 st
3800 sq ft 3 story, but notes full basement included in this number
(probably is full height basement and needed to file for a proper CO at some point)

air rights still have 4108 sq ft
taxes are $34k
potential lost tax revenue, additional $37k

sliver rule
First,there was talk of "punishing" forever empty lots of land. I think after a fair amount of time, it should be taxed as built. 3 years? 5 years? whatever. It shouldnt forever stay as just land like that 8th ave, just north of 14th st property that half fell down during the 2012 hurricane. 10 years later, its a fenced in plot of land, earning land rate taxes, serving as a right off for something.

But back to sliver, yes these are the rules for selling air rights currently....and generally. If we did change how we tax these townhouses, thru unused air rights, a loosening of this rule could be accomodated. The point is, somewhere, someone would be paying property tax on that space, instead of it being stored away by more affluent townhouse owners.

I think the first step in rationalizing the taxes is to start charging based on market values. This will take care of unused FAR as it will get built into the market price to some degree. DOB effectively goes out of their way not to allow use of the additional FAR on existing townhouses due to a requirement of complying with the new code vs the code the townhouse was built under. So unused FAR being taxed is very complex issue subject to disagreements on the principle of it. Much more bang for the buck and more easily palatable is rationalizing the system to a real market value based one.

Taxing FAR at a "market rate" would be tantamount to taxing capital gains each year on your condo/co-op, even if you didn't sell, but based on market value.
It's a slippery slope, especially when you don't cut taxes, or give rebates, when values go down