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Rental wars, 70% increase in rents and the lowest vacancy rate in the last 14 years: what does a landlord think?
A year ago, homeowners were doing everything they could to woo tenants: pay brokerage fees, offer multiple months of free rent, even give Peloton a gift. In February 2021, the vacancy rate in Manhattan was 11.79%. In the space of a few months, everything changed. As people flocked to the city last spring in anticipation of a reopening that never happened, the vacancy rate plummeted and the rental market became brutally competitive. Renters have begun to report increases of 50, 60, and even 70 percent on lease renewals. Desirable apartments are now receiving hundreds of inquiries. There are lines around the block to open doors and brokerage fees of the basic 15 percent. According to the latest market report from Douglas Elliman, bidding wars, unheard of until last year, now occur in nearly a quarter of apartments in Brooklyn and Manhattan. Median effective net rents in Manhattan, whose rental market has been hit by the pandemic more than any other in New York, hit an all-time high – $ 4,000 a month – in May. The vacancy rate in Manhattan dropped to 1.77%.
Renters reacted with disbelief, despair, confusion and TikTok videos. After all, we are still experiencing a pandemic.
But we have heard very little from the owners. Are they happy to have the upper hand once again? Unrepentant for renting apartments at market prices for market rents? Filled with guilt but ready to make up for it for 2020 and then some? We spoke to three owners – one in the Upper West Side, one in the West Village and one operating in Brooklyn and Queens as well as in the northern suburbs – who agreed to speak anonymously about these hectic conditions.
The Properties I have all smaller two-, four-, and some six-family buildings in Brooklyn and Queens: Ridgewood, Bushwick, Red Hook and one in Park Slope. I also have a few buildings in north Westchester. I probably have around 75 units right now. A great landlord would probably see things differently: They don’t even know their tenants, and rent increases are very automatic.
Empty versus Occupied Apartments When I found vacancies, they increased about 20 percent from my pre-COVID rents – but that’s 20 percent after three years, and my rents tend to be pretty low. I tend not to increase tenants much or not at all – five percent is pretty much what I looked at this year. I call people and say your rents are rising: a guy who signed a two-year lease during COVID said, “Wow. I never expected that.” I was like, “What are you talking about? Five percent after two years is not even in line with the rent stabilized leases ”. He is signing again, but he acted like it was crazy.
COVID Era Offerings and Anti-Owner Sentiment As an owner, COVID has been frustrating. People stopped paying rent and there was this sense, because it’s your home, when times get tough, you shouldn’t expect to pay. Every person who stopped paying me during COVID managed to keep their cell phone, electricity, high-speed Internet connection on. But real estate, is it different? Inflation was 8 or 9 percent last year, water bills continue to rise. When I have to replace a dishwasher or do a repair, everything flows, yet there is a feeling that the owners should only take care of it.
Even with the emergency rental assistance program, when the government repaid the rent, often not in full, he said, “Now you can’t raise the rent for a year.” How come? You, as the federal government, took my livelihood during COVID, and whether I agree or disagree, when the smoke has cleared, why can’t rents go up? Why is housing a human right and I shouldn’t be in business?
The whole world seems to think that being a landlord is not something you should do for a living. It’s so insanely anti-landlord, it’s almost funny. People on the street: “Cancel rent”. What does it mean? Safe. Cancel rent. What does it mean? Cancel shopping costs. If it’s “Oh, real estate shouldn’t be a business,” then let the government do it. In my opinion, they do a very bad job and in the end nobody wants the government to manage their homes. Yet they don’t want the owners to be landowners as a business. Where does he leave something? It is a strange time.
Renting apartments during the COVIDOne vacation period I recently had was in Park Slope – they went from $ 4,000 to $ 4,850 a month. It’s a garden duplex, but it’s really just a legal bed, one and a half baths, technically. But it is very beautiful. Central AC, I finished the original stone wall. My apartments tend to be unique, not shaped like molds. I rented it in two days, so I don’t even know what I could really get. Everything I came up with went very quickly, which probably means I haven’t valued them highly enough.
This particular unit, I arrived to do a screening and my tenant had just moved in so there was no electricity, no lights and the place was in disrepair. Nothing is ever beautiful right after someone moved in – they had lived there for six years and there was some furniture left in the unit that they would be relocating shortly, so the place looked bad. I was like, why am I here too? I can’t show it. Then comes the couple I was showing it to and says, “We love it, we’ll get it.”
This is what it was like to show apartments before the Internet or before StreetEasy. When I was renting Craigslist, if people showed up and they liked it, they took it. But with StreetEasy, they said, “Wow, we love it, but we’ve got ten more places to see.” Now he’s back. When people show up, they have already lost three apartments and want to close it.
Tenants negotiate the best possible deal. The market is insane and the narrative is, “The landlord is bad, the landlords are raising the rents.” But let me tell you, the owners got crushed during the COVID. And when the bubble burst in 2008, don’t think the tenants didn’t call me and say, “Hey, I’m expecting a rent cut because the market is down.” I haven’t had a single tenant say, “I’m worried you’re having a hard time and I’m fine with the rent I’m paying.” My purchase cost will increase dramatically – where should that money come from?
I have a tenant who, when I was renewing his lease last summer, said, “I see you have this other unit on StreetEasy and I want it for the same price.” Well, that other unit just got leased for a 20 percent raise. I’m so ready to call that woman and say, “Ready to play the StreetEasy game again? Did you want the same rent as that unit last year? Well now it’s 20 percent more. You anchored in the 2R apartment. – I didn’t, you did. I’m willing to sign a document saying that from now on you can pay whatever 2R you pay, regardless of whether it’s up or down. ” His lease expires in July. I’ll do it 100 percent.
Honestly, why shouldn’t I? If this is the market? Why should I be a good guy? But last year, when I was dying and the ERAP checks didn’t come or anything and I was drowning, she looked at me and said, “I’m going to get my piece.” Now, do I do exactly the same thing when there is a food frenzy out there? There were 20 responses in one day to the empty apartment in his building. That’s $ 3,650 for a three bed in Bushwick, which isn’t much in this market. Why shouldn’t I charge what I can charge? Doesn’t that sound bad, though? But isn’t it strange? This is how I make my living, so why is it less worthwhile than any other business? Why presumably can I afford not to?
The Properties My husband and his family have two buildings on the Upper West Side, ten apartments each, all with one bedroom. It’s a mix of flat-rate and free-market apartments, which is extremely important in this discussion. The legal rents that I am taking on the stabilized portion of the rent are so below market that they do not cover the expenses, so the market units are heavily subsidizing those below market rents.
Before COVID, our stabilized average rent was $ 1,250, and our average free market rents would have been in the mid-high two thousand. The shortest rent I have for a flat rate apartment is 30 years. I have tenants who have been there for more than 50 years.
The math on rent increases Rent increases are always a judgment: how long have they been there? Think I can get a raise? Is a raise reasonable at this time? In one of the buildings, I had sent out lease renewals to three tenants prior to COVID with a $ 75 raise. All renewed and leases signed pre-COVID. When COVID came, I contacted the woman who does our leasing and said, “I don’t think this increase is appropriate.” He said, “You’re the only landlord I’ve heard of that.” I think it paid off the following year. There was so much vacancy, I sent them lease renewals without any changes. They all stayed.
The other building was different. Leases were coming in June 2020, COVID had already gripped the city and I had to offer discounts. One woman was self-employed and was very worried. Before COVID, it paid $ 3,150. So we agreed on a lower number, $ 3,000, and on top of that we gave her three months of credit of $ 200 or $ 300. The next year, we offered her a $ 2,800 lease renewal and she replied with $ 2,700, which we happily accepted – I didn’t counterfeit. Now I’m almost ready to renew her lease. At a minimum, I have to go back to that pre-COVID number, $ 3,150.
I keep hearing people talk about “Oh, my rent went up by $ 500”. But what I don’t hear is what they were paying for in February 2020. What are the discounts they got during COVID? I don’t think the numbers are as crazy as it feels. If you have something with a 20% discount, a 3% increase is not unreasonable. Take your savings when you get your savings.
The COVID Owner Assistance Program During the two years that owners have operated during COVID, they have had serious problems. There were many landlords who had empty apartments that they couldn’t fill. Others had tenants who were unable to pay, people who worked in restaurants whose jobs had just disappeared. And then you had the worst kind of person who worked and just followed the rhetoric of “cancel the rent”. I know a landlord in the Bronx, the tenant didn’t pay for seven or nine months – one day, he returned the key and said, “I’m buying a house.”
When owners share those stories, they are slandered or belittled as outliers, but you listen to them all the time. The way they created the rent relief program allowed the bad actors to take advantage of it. People who really needed help, who worked in industries where their jobs vanished overnight and were struggling, living from pay to pay and may have had a language barrier or lack the technology skills to apply, they probably haven’t gotten the relief, meaning the owner hasn’t gotten the relief. On the other hand, I know many landlords who have obtained relief from the landlord rental assistance program for tenants who were working. It was a failed system.
Doing the math as a landlord, I think the biggest numbers you are reading about are the high-end buildings with lots of amenities. Someone I know moved into one of those super-luxury downtown buildings in December 2020. He took a 14-month lease and got three months’ free rent – his lease was $ 3,195, but it was $ 3,195. $ 2,510 for a bedroom. Now his rent is $ 3,754, an increase of 17.5% on the contract rent and 50% on the actual net rent. But it is a large apartment with a fabulous view and the apartments around it are charged from $ 4,200 to $ 4,500.
From what I’ve read, there seems to be a really high renewal rate. There is not enough accommodation available, people feel trapped, not a word I like to use, but they have no options. And it’s expensive to move.
I have never seen our bills rise like they have in the past few months. We heat with gas, usually cheaper, not more. Our insurance increased by 48 percent last year. The multi-family market is paying a huge and disproportionate share of the property tax burden.
I remember last year trying to figure out what was going on with our property taxes. I created an Excel spreadsheet at the bottom of the block, how many units, how many units with stabilized rent. A single family home that had been an apartment building or an SRO: their home was probably worth two, three times our own. Their fees were close to $ 50,000, and we’re in the $ 80,000 to $ 85,000 range. Condominiums are paying a disproportionately high amount of taxes and, in reality, they are paying renters in buildings. That’s why New York City is such a mess.
Properties I inherited this building. My great-uncle bought it for his mother in 1919. I grew up here: when I was a child my great-uncle, two great-aunts, my grandmother and my parents lived in the building. My great-uncle paid for it before he died, so we never got a mortgage. There are 20 units, but I live in four of them. All studios or one bedroom. One unit has a controlled rent and another three with a stabilized rent. A childhood friend lives in the rent-controlled unit, and I just got one of the steady-rent units back. It rents for $ 1,800. If it were at the market rate, it would go to over $ 6,000. Most of the apartments we got in the 80s and 90s have become market rates. The rules then were that a percentage of what was spent on repairing an apartment could be added to the rent. If you did a good post, it added up.
Fixing rents About half of my tenants moved during the pandemic. An apartment was overturned twice. If they didn’t give up their apartment, they still left the city. The couple in the stabilized rental apartment also went to their home in Hawaii for much of the pandemic and decided not to return. Most rents dropped $ 50 to $ 500. When I had vacancies, I got what I could get.
I hate raising rents on existing tenants. I usually try to do this incrementally and if people ignore the new lease I give them, I usually don’t do anything, since it’s just $ 25 or $ 50 more per month. But I know I have to do something now. I’ll probably increase them by between 2 and 10 percent. I have two guys who pay $ 3,900 for an apartment they rented for $ 4,250 before the pandemic – it was empty for two months before the rent. I will try to bring them to $ 4,200. Landlords who live in their own buildings look at things differently than landlords who have 400 units and are just paying a numbers game – it’s perfectly possible for them to say, “I’m raising the rent by so much and you can pay it or leave. . “
New Tenants The two most recent apartments I rented in December 2021 and early winter 2022. The first, the couple who lived there, paid just under $ 5,000, and we put it on the market for a couple of hundred and more than $ 5,000. Many people showed up at the open house and there was a bidding war. Eventually I rented it for $ 6,000 a month to a guy who lived down the street and wanted it for his daughter, a college student. There was another guy offering $ 6,500, but it seemed like so much, it gave me a bad feeling. Also, I don’t like renting to young white straight men – they tend to throw parties and have rights and difficulties. It wasn’t a prejudice I started with; it’s been what I’ve had over the years living with people. But now I have problems with the college student. He celebrated there, people are vaping in the corridors. I should have gone with the bro-y boy. But the father was so nice and lived just down the street.
The other unit I rented, there was also a bidding war. It had been $ 4,100 and it took me a year to redo the kitchen and bathroom. We put it on the market for $ 4,500 or $ 4,600 and I get $ 5,750. It’s a really nice remodel – lots of furniture in the kitchen and the bathtub is one you can soak in. I don’t know if I had to do all the work to get a higher rent, though. I probably could have had it without it. But only because I waited a year to rent it.
I don’t approve of insanely high rents right now, but I don’t think it’s just caused by the landlord’s greed. I think they are also caused by the developers and the way they are encouraged to develop properties, building only luxury apartments.
Supply and Demand In average times, when rents were quite high but stable, I would sometimes find three different good tenants to choose from, which was its special little hell. Sometimes someone said “I can pay all year up front” to make themselves more attractive, but now it’s illegal. I think the bidding wars are just due to a lack of inventory. There is nothing on the market. That’s why rents have gone up so much. When 50 or 100 people showed up at one of my open houses, my broker and I were wondering what was going on. He searched online and found there were only 11 single beds in all of Greenwich Village in any price range.
Usually I would go with the highest bidder, except this time. Because they will be my neighbors, I always like to meet them. I want to get an idea of who they are and if there are any red flags. There was a woman who had tried to rent an apartment here before and she lost who would have rented the bedroom which ended up being for $ 5,750. I was ready to rent it to him, but this other woman offered a lot more money and I thought, sorry, who knows when that will happen again?
For a number of years, rents seemed to be static. They were sky high – from $ 4,000 to $ 5,000 for one bedroom and studio apartments around $ 3,000 – but they weren’t really going up. I was worried because my taxes were increasing from $ 16,000 to $ 18,000 per year. And then everything changed. I think it will continue to be like this for a while, because people are still coming back and there seem to be so few apartments on the market. My broker was jumping up and down at me, saying, “You have to raise everyone’s rents or else they will never move.”
I think one of the things that the rental history of this city has made clear is that people get stuck in apartments. When people stay long enough, the rent is so low that people can’t afford to relocate.
Just like the cover letter you would send to a potential employer, a renter cover letter should showcase your best features for the owner or property management company and let decision makers know that you are the best choice. among those presented, showing your professionalism and responsibility, two qualities …
What counts as high-rise?
Answer: As stated in the definition of a skyscraper in Section 202 of the International Building Code (IBC) 2015, a building is considered a skyscraper when there is an “occupied floor” more than 75 feet above the lowest level of access of the fire brigade vehicles.
Is 7 stories considered a skyscraper? 1-4 story buildings should classify all of their units as low-rise. 5-9 story buildings should classify all their units as medium rise. See the article : Willie Wilson advertises upcoming food and gas deals for $ 2 million. Buildings of 10 or more floors should classify all of their units as skyscrapers.
How many feet is considered a high-rise building?
In the United States, a skyscraper is defined as anything taller than 75 feet (23 meters) or around seven floors. A skyscraper is often referred to by construction engineers, inspectors, architects, and other professionals as being at least 75 feet tall.
What makes a high-rise a high-rise?
As for skyscrapers, these are generally more than six stories or stories high. In addition, most of the skyscrapers have a height of 100 meters. See the article : The California Governor’s mental health court plan is progressing due to concerns. (These are not to be confused with “skyscrapers”, which are generally much taller, up to 200 meters high.
Is 4 stories considered a high-rise?
Low, medium and high floors A low-rise apartment has few floors, typically four or fewer. An average floor is higher, five to twelve floors, and a tall apartment has at least nine floors. This may interest you : Does Summer of Revenge Travel Here? Hope Businesses So.. Upper and middle floors are more common in urban areas.
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Should I paint my rental all white?
White and cream are by far the most desired wall colors for apartments. Apartments and houses for rent painted in white or off-white can be rented quickly. They make smaller rooms seem more spacious, are pleasing to the eye, and go with everything. So remember to stick with neutral tones to avoid complaints from your landlord.
What is the best color for the rental property? Grays, bronzers, and creams are most recommended for rental properties. Generally, it’s best to choose lighter colors for most of the house and slightly darker tones for areas like the dining room or bathroom.
Is it worth it to paint a rental?
Now, if you have a long-term lease in writing, painting your apartment might be worth it. If the current paint is not in the best condition and the owner is willing to pay for the paint or reduce the rent, that may be worth it too.
Should a rental be painted white?
However, a rental is not the ideal place to show off your owner style. So instead, when choosing colors for kitchen cabinets, make white your go-to, especially if you’ve avoided white paint throughout your rental unit.
What is unfair eviction?
Harassment and illegal evictions. It is a crime for your landlord to harass you or try to force you to leave a property without using proper procedures. If this happens, you may have the right to seek damages through the court.
Can landlords evict in California right now? California will pay people’s unpaid rent if they are left behind in payments due to the pandemic. People have to apply to get the money, and state law says they can’t be evicted while their application is pending.
How long is the eviction process in Texas?
How long does it take to evict someone in Texas? Approximately three weeks from start to finish â € ¢ 3 days from termination to filing of the case â € ¢ 8-10 days to notify the summons -The law requires the defendant to have at least six days’ notice not exceeding 10 days before hearing.
Can you be evicted during coronavirus in NC?
There is no longer a CDC nor any state eviction moratorium in place. After August 26, 2021, your landlord can file a summary deportation claim (often called an eviction) for non-payment of rent and for any other violation of the lease.
How long is the eviction process in NC?
Many owners will be curious about the North Carolina eviction timeline as they begin the process. Usually, the process takes three to four weeks. You must wait for the 10 day notice period, followed by the 7 day court subpoena period. Thus, the tenant has up to 10 days to move in.