Raising Rent In Lakewood

[Yakov15]

I never quite understood this position.
Is a landlord only allowed to charge rent relative to his mortgage+taxes+insurance+maintenance?
What happens after a mortgage is paid off & the landlord is left with just taxes+insurance+maintenance - is he expected to charge less rent?
Also, why isn't rental income just another stream of income and with the landlord's tuitions etc. going up he needs more income?

I never stated that this is my position. I was just responding to op’s claim that it’s not covering the current costs of fees and maintenance on the rental.

[Yakov15]

That’s quite a blanket statement. If you’re talking about a wealthy homeowner and a struggling yungerman in the basement I can here that, but more often than not the landlord has as much financial need as the tenant downstairs, and often even more. There can also be other factors. I had a neighbor who realized his tenant had his own investment home which he was renting out. He felt like he was simply subsidizing the tenants house by charging the tenant so little, so he raised him to market. Shortly thereafter the tenant decided to move to his home once the arbitrage was no longer a factor.

That story is not as crazy as you think. The tenant bought a house cause he wanted to lock in prices and for stability, he rented it out because he couldn’t afford to live there yet. Doesn’t sound like a major “investment property” to me. Lots of people have done this recently, some have even rented out the property below their mortgage. Maybe a tenant shouldn’t be able to buy a car either?

[jye]

A $1300 raise is $108 per month and that is over 4 years.

You don't seem to understand how tax assessments work. If there is a reassessment on the entire town the dollar amount does not change much for most houses and many will down even

$108 in taxes, almost another $100 for property insurance increase,  then some for  maintenance and you are approaching a $300 rent increase.

Of course the total township levy stays the same, but unless I am mistaken the newer homes generally gain from a reassessment in a rising market; the older homes, the ones undercharging for rent, face increases. Then there is the county share of taxes which will not be a wash if Lakewood is reassessed.

[jye]

That story is not as crazy as you think. The tenant bought a house cause he wanted to lock in prices and for stability, he rented it out because he couldn’t afford to live there yet. Doesn’t sound like a major “investment property” to me. Lots of people have done this recently, some have even rented out the property below their mortgage. Maybe a tenant shouldn’t be able to buy a car either?

Either way, I’m not saying that a landlord doesn’t have a right or shouldn’t raise the rents to current market rates (though I do hear the arguments for that). But don’t call yourself a tzaddik and a mensch for “only” raising the rent by $400.

In some situations it probably makes sense. Kind of like when meshulachim from Israel knock on the doors of basement rentals to collect money to buy a dirah for their newlyweds.

But in a general sense do you think it really makes sense for a landlord to undercharge the tenant who is only living in the basement because he can underpay his landlord while getting top dollar for his investment property at the same time?

[Yakov15]

In some situations it probably makes sense. Kind of like when meshulachim from Israel knock on the doors of basement rentals to collect money to buy a dirah for their newlyweds.

But in a general sense do you think it really makes sense for a landlord to undercharge the tenant who is only living in the basement because he can underpay his landlord while getting top dollar for his investment property at the same time?

I don’t think it should be looked at as real undercharging. And no, the price of the basements should not be 2k plus. To take some ridiculous numbers that people are charging because they’re taking advantage of the market, and to make a pshara off that amount is not tzidkus or yashrus or menschlechdik. Again, I don’t think anyone’s doing anything wrong by raising rentals, but to think of oneself as a mensch while raising the tenant $400 monthly that’s wrong imo.

[jye]

I don’t think it should be looked at as real undercharging. And no, the price of the basements should not be 2k plus. To take some ridiculous numbers that people are charging because they’re taking advantage of the market, and to make a pshara off that amount is not tzidkus or yashrus or menschlechdik. Again, I don’t think anyone’s doing anything wrong by raising rentals, but to think of oneself as a mensch while raising the tenant $400 monthly that’s wrong imo.

Rav Kahan actually addressed this point in a shiur. He said people have it wrong thinking that the price of basements should not be 2000 and it’s unfair or that there is any issue in Halacha or any problem to charge that to a new tenant. He said that is actually the market price which like everything else in the market is determined by supply and demand.

There is a shortage of around 2 million eggs due to bird flu so you are seeing $5 a dozen in stores. This help align supply with demand and is now a legitimate market price. (My own example.)

[ari3]

Judging by the length of the list of available rentals in Masa Umatan there is no longer a shortage. Have rent's started to come down?

[aygart]

Judging by the length of the list of available rentals in Masa Umatan there is no longer a shortage. Have rent's started to come down?

Give it time and the roles will be flipped with tenants demanding that their rent go down.

[jye]

Judging by the length of the list of available rentals in Masa Umatan there is no longer a shortage. Have rent's started to come down?

Still has a ways to go. In 2017 when the rental market imploded there were 17 pages and over 540 listings in Massa Umattan including sign on offers of a free trip to Israel- in a much smaller market than today. We may very well get there eventually as the Lakewood market cycles as it has several times in the past.

Tenants were asking for concessions back then but the difference in rent was only a couple of hundred dollars or so. I’d bet that if tenants found themselves paying $1000 OVER the current rent price with hundreds of vacant apartments available, most tenants without a lease wouldn’t accept a פשרה and  settle for a reduction of $400: they would just walk. And somehow I doubt we would hear too many cries of

but don’t think you’re a mensch too.

[avromie7]

Judging by the length of the list of available rentals in Masa Umatan there is no longer a shortage. Have rent's started to come down?

They are definitely down from the ATH, but still a long ways away from early 2020.

[Euclid]

They are definitely down from the ATH, but still a long ways away from early 2020.

In these listings it looks like people are asking $2200 for a 3br/2b. That's not an all time high?

[aygart]

In these listings it looks like people are asking $2200 for a 3br/2b. That's not an all time high?

Those are the ones that did not get taken

[drosenberg88429]

What i noticed from perusing the Masa Umatan is that there are almost as many houses for rent as apartments, and that the majority of apartments do not have prices given and instead say to call.

[jye]

In these listings it looks like people are asking $2200 for a 3br/2b. That's not an all time high?

Much like the housing market, you will often see this dynamic when the market peaks and starts to decline. Asking prices are at all time highs but properties start to sit, as there is an imbalance between sellers/landlords who haven’t yet come to terms with the fact that their property won’t command the record price of a short time ago, and buyers/ tenants who balk at the asking price. Eventually there is capitulation and prices come back to reality.

The same is taking place with single family houses. Most are still priced at 1.2 or more. With mortgage rates at 7%  sellers would need to shave a couple hundred thousand off the price to get to the same monthly mortgage payment as when rates were 3.5%. Buyers are starting to wait on the sidelines, and mortgage brokers are twiddling their thumbs.

In the commercial multi family apartment market the same dynamic is taking place. Sellers still think they can price at top dollar like earlier this year, but buyers are balking at cap rates that are lower than current mortgage rates. Sellers that are desperate are already taking substantial price cuts to sell but in general things are stalled out for now. Eventually reality will hit and this will translate to lower prices going forward.

[Yakov15]

Rav Kahan actually addressed this point in a shiur. He said people have it wrong thinking that the price of basements should not be 2000 and it’s unfair or that there is any issue in Halacha or any problem to charge that to a new tenant. He said that is actually the market price which like everything else in the market is determined by supply and demand.

There is a shortage of around 2 million eggs due to bird flu so you are seeing $5 a dozen in stores. This help align supply with demand and is now a legitimate market price. (My own example.)

In which area did Rav Kahan address this? Williams street area?

[Yakov15]

Much like the housing market, you will often see this dynamic when the market peaks and starts to decline. Asking prices are at all time highs but properties start to sit, as there is an imbalance between sellers/landlords who haven’t yet come to terms with the fact that their property won’t command the record price of a short time ago, and buyers/ tenants who balk at the asking price. Eventually there is capitulation and prices come back to reality.

The same is taking place with single family houses. Most are still priced at 1.2 or more. With mortgage rates at 7%  sellers would need to shave a couple hundred thousand off the price to get to the same monthly mortgage payment as when rates were 3.5%. Buyers are starting to wait on the sidelines, and mortgage brokers are twiddling their thumbs.

In the commercial multi family apartment market the same dynamic is taking place. Sellers still think they can price at top dollar like earlier this year, but buyers are balking at cap rates that are lower than current mortgage rates. Sellers that are desperate are already taking substantial price cuts to sell but in general things are stalled out for now. Eventually reality will hit and this will translate to lower prices going forward.

I thought you stated that these prices are the reality and they’re fair prices?

[Euclid]

In which area did Rav Kahan address this? Williams street area?

That's his brother, R Moshe Chaim. R' Dov is the rav in Arlington shul, and posek of BD Maysharim. One of the leading choshen mishpat rabbonim in Lakewood.

[Euclid]

What i noticed from perusing the Masa Umatan is that there are almost as many houses for rent as apartments, and that the majority of apartments do not have prices given and instead say to call.

Also a big percentage (most?) of the apartments are furnished/short term.

[Euclid]

I don't understand how the apartment supply seemingly has grown. Real estate sales have decreased in the past few months (even in Jackson/Manchester/TR) i.e. people are staying put - and even people buying new homes don't have a basement to rent out (how it was previously, if a tenant moved out of a basement that often meant that he was moving to a house that had a basement apartment too - adding to the supply), since there's been no new developments recently.

Is it that more couples are moving to EY?

[aygart]

I don't understand how the apartment supply seemingly has grown. Real estate sales have decreased in the past few months (even in Jackson/Manchester/TR) i.e. people are staying put - and even people buying new homes don't have a basement to rent out (how it was previously, if a tenant moved out of a basement that often meant that he was moving to a house that had a basement apartment too - adding to the supply), since there's been no new developments recently.

Is it that more couples are moving to EY?

It also became more lucrative to rent out a basement. People who had unfinished basements were finishing them at the the current high construction prices because they were hearing about how much their friends and neighbors were making.