Buying an occupied nyc rent controlled apartment for personal use

[Paul Jump]

I am evaluating an under market for a rent controlled unit currently occupied by a tenant in NYC. The property is a foreclosure so I can't get any information from the previous owner. The rents collected are about half cost of the HOA fee.

My situation is that I am actually looking for a primary residence and would be willing to live in this property for several years. 

So, the risk is if I can’t do an owner use eviction, I’ll essentially be substidizing the tenants rent every month out of my own pocket. 

Any advice how I can either gauge the likilihood of an owner use eviction being legal for this particular situation beforehand OR somehow legally raise rents to close the expense gap?

[Josane Cumandala]

For legal advice, retain an attorney. NYC is an animal unto itself. The laws are very complex and favorable to tenants. 

You mention an HOA... is this a condominium unit? Coop?

I'm not a legal expert but I am an NYC based real estate appraiser and I have to say...if you're looking for a primary residence and want to move in somewhere relatively soon don't be fooled by the low price tag. The price is low because the unit is not valuable to the market. Rent controlled tenants are nearly impossible to evict in any reasonable amount of time. My experience is that people who buy these units do so at a considerable discount and basically have to wait for the tenant to die or break some kind of law such as subletting/Air BNB.

Also rent controlled units generally have SIGNIFICANT deferred maintenance issues because there is no incentive to maintain them. So you have to have a repair budget factored in as well. 

I wouldn't risk it personally but it's your call. If you are planning to owner occupy and want a bargain maybe search for HDFC coops? There are income restrictions but if you qualify you can buy an apartment for pennies on the dollar.