Real Estate investment

[yuneeq]

Repost:

Whoever is complaining that the new rent laws hurts him is either a liar or sucks at underwriting his deals.

Any existing owner being hurt by this is just using it as an excuse for bad buys in the last few years. RGB rents have only gone up by fractional amounts the last 5 years, less than 2% a year, so one cannot complain about the caps on rent increases. IAIs are almost impossible to do except on turnover. MCIs get capped now, sure, but if it’s the difference between a 4% annual increase and a 2% is what is blowing up a deal, then the operator didn’t have enough cushion to start with.

And as for unit turnover and deregulation… do you know how hard this is to do now? From 2012-2017 something like 5,000 units a year were deregulated in NYC. That’s a fair number, I guess, but one cannot make the case that we’re going to see a wave of defaults simply because those 5,000 units no longer get deregulated.

What we’re going to see is that people who bought in 2015-2018 on the back of cheap debt and the assumption they could buy-out or evict tenants, getting their positions wiped out and blaming the new rent regs for their bad decision making. As far as tenant protection goes, the writing was on the wall a long time ago. It’s not easy, at all, to buy out tenants these days. There were approximately 966,000 rent stabilized apartments in NYC in 2017 (exc. rent controlled units); there were 3,517 that deregulated. That is .36% – even if you assume that many owners couldn’t or wouldn’t want to deregulate, you are still looking at minimal turnover. People made fortunes doing this in Brooklyn in the early 2000’s because with cheap buyouts and shady eviction practices they were getting 10-20% turnover. That just does not happen any more. Anyone who has underwrote to try and achieve that in the last half decade, deserves what they’re getting.

If ///// is such an operator then he should leave the industry, not NYC. A lot of the LP money in the community is raised on the basis of shoddy and unrealistic assumptions. Perhaps these laws will just put an end to that. And obviously, 99% of the “crocodile” tears are from those who like cheap talk but don’t even own a broom closet in a RGB building (or any building).

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[shulemw]

What nonsense. looks like you dont even own a broom let alone a closet.

Why is someone who bought a building with the assumption of doing buyouts, That got more expensive, but was still doable, and if you knew how to talk good it wasnt so expensive, Why is he considered a. ...and he should quit whats wrong??

Let alone the argument about the percentage of the units that got deregulated...
From getting $900 a unit till being deregulated there was a long path in the middle that was possible and profitable to take. was normal ways to get any vacated unit from $900 to $2200 and it was still regulated but it added alot to the value.

So please before writing or reposting think a second

[YesThatsMe]

What nonsense. looks like you dont even own a broom let alone a closet.

Why is someone who bought a building with the assumption of doing buyouts, That got more expensive, but was still doable, and if you knew how to talk good it wasnt so expensive, Why is he considered a. ...and he should quit whats wrong??

Let alone the argument about the percentage of the units that got deregulated...
From getting $900 a unit till being deregulated there was a long path in the middle that was possible and profitable to take. was normal ways to get any vacated unit from $900 to $2200 and it was still regulated but it added alot to the value.

So please before writing or reposting think a second

Whoa don't shoot the messenger, it was a repost which I though adds some color to the debate, from the other side.

You're right, I do not own anything in NYC.

He says buyouts were made tough to impossible. You say otherwise. I'm not judging, I want to see dry hard numbers that show how many units (as a % of inventory) were deregulated through buyout-to-vacant in the last few years.

I guess this operator feels differently about the issue.

[JS69]

I have worked in the industry for almost 20 years now and I work for a family who has been around for almost 50 years. They will survive this like they have other dips and dives in the market. But this is who will be affected:

1) The small guy who bought a 6 unit building for his family. Banking on the guy paying $500 a month to move out and putting someone in at $2000. Not going to happen. That guy will have a tenant who won't pay it will take 18-24 months to evict. That guy will hurt

2) Anyone in an associated part of the industry. Our contractor supplier laid of 4 employees already just to try and stay ahead of the game. We do no plan on doing any renovations in the near future until we all sort these items out. So that means our contractors will be forced to lay off employees. Brokers will not sell buildings, brokers will not rent as many apartments (or higher fee apartments etc...) And the trickle down continues.

3) The "tenant in need of low income housing" are not getting the lower priced apartments. We just had a 2 bedroom apartment who if we were able to do our vacancy increase and IAI's would have rented for $2650. Instead we chose not to do the work and kept it at less than $1700. We had multiple application and chose to give it to a student with a guarantor with the hope that in 2 years some aspect of the laws will change and we can adjust then.

These laws were not thought out and will have a ripple effect across the city and state. They simply protect the same people who have been in a $600 4 bedroom upper west side apartment for 50 years that will probably outlive all of us!!!!

[YesThatsMe]

Your point in number 3 is contradictory. Clearly the law has helped this guy, he got a unit for $1,700 that would of costed him $2,650

[shulemw]

You miss a point. by looking on cold dry numbers on how many units got deregulated you dont get the whole picture.

as i wrote earlier from $700 till deregulation at $2775 there is a long way to get people to renovate profitably.

lets say you had a $700 unit and the tenant moved out or even you offered him a 15k buyout then renovated the unit for 35k and raising the rent to $2400. this unit is still regulated but it brings in $1700 more a month

[hvaces42]

Under new law if you gave preferential rent youre stuck with that and increases on that number not on the legal rent. MCI improvements are only for 30 years then rent gets lowered back to pre MCI numbers. Tracking these numbers will be impossible.

[JS69]

Your point in number 3 is contradictory. Clearly the law has helped this guy, he got a unit for $1,700 that would of costed him $2,650

If you read the rest of my post, you will see that it didn't go to a low income tenant like the city thinks it is. I rented it to a student whose father is the guarantor (the father is a doctor out of state making more than $750,000 a year. I didn't give it to a family of 4 who works at a bodega......

[Dovdovmoneytree]

https://commercialobserver.com/2019/06/its-the-end-of-the-world-as-we-know-it/

[uo]

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[ltttc]

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[uo]

only Commerical

[good sam]

Incredible Commercial Property Management Company is growing & taking new clients. Managing over 100 Million Sq Ft in over 8 states. Saved customers thousands of dollars they had no idea they can get. If your are ok about your current management company reach out to me to see if & we discuss your account to see what savings we can get you.

This is pretty vague. What exactly does ICPMC do that other companies don't to save money? Or is that a trade secret?

[Kvending]

I have a great deal for someone who CURRENTLY owns a lot of Office Property.

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[ltttc]

I have a great deal for someone who CURRENTLY owns a lot of Office Property.

This is strictly for current office owners only.

Care to share?