All Forum Posts by: Freeman Schultz

 You should certainly start the process earlier than maturity, especially at the very least within a couple months of the maturity date - there can always be things that cause delays and pushes and even missing the maturity date by a couple weeks can have harmful consequences (since it will technically be a default / missed payment even if the lender is OK with it).

Also, commercial loans even with the strictest prepayment protections / lockout periods will almost always have at least a 3-month open period prior to the Maturity Date

 Hey Freeman, 

This depends on your goal. Will a refinance increase your cash flow? Will the refinance help you cash out on equity to buy more rentals? If it's reaching maturity and you are planning to keep the property longer, maybe you will need to look for a longer term. There are commercial mortgages that are 30 years fixed with no balloon or ARM.

What type of property? 

In advance: know what credit score, income, and equity are needed before you purchase to be able to achieve this every five years.

I would always prefer to leave a unit vacant (even for an extended period of time) rather than place a suboptimal tenant, especially here in NY.

In the Socialist Republic of New York, there are very few means left for landlords to use with prospects that are less than perfect with regards to screening criteria.  Since one cannot deny an application based on previous evictions (you're reading that right), nor collect any additional security beyond one month or any advance on rent (such as last month), it's difficult to mitigate that business risk.  Add in NY's historically lengthy and expensive eviction process, and the "just cause eviction" statute that appears imminent, and you have a recipe for being financially disemboweled by placing a bad tenant.

(Side note: I will debunk your theory about refusing to lower the rent.  I've found that I get WORSE qualified prospects when I reduce the rent on a vacant unit, and not a single "highly qualified bargain hunter.")

Sometimes, there is a point where you've been through the pool of current apartment seekers and they are all woefully inadequate, so it's time to take the ads down for a few weeks and let the duds work their way through the apartment hunting process with someone with lower standards / bigger appetite for risk.

You can thank the NYS legislators for passing such draconion, unilateral laws that actually hurt the very constituents they claim to be protecting.  So, warehousing it is, sometimes.  It certainly cuts my top line revenue.  But it certainly beats the alternative.

Based on your experience, I am obviously not alone in coming to this conclusion for my rental business practices.

 Wow, interesting story. If this doesn't speak to how broken the housing market is, I don't know what is. Maybe NYC shoudl focus more on these landlords who are warehousing available housing, look carefully at their rent control rules and focus less on short term rentals if they really want to fix the affordable housing crisis.

Freeman, when I was searching for properties to purchase, I actually ran across rentals that make no sense for the landlords to rent out if it's under rent control, and later rent stabilization. See Vacant Apartment

The best example I ran across was some 30 years back when 2BR apartments rent for $600/month, currently $2,500/month, a 2BR apartment was rented to an old lady, then 92 years old and there for over 30 years, for $90/month. I asked why so low, and I was advised that all controlled apartment rent increases require board approval, every other year or so, and it runs about 3%, with lots of paperwork. So why spend all that time and effort for at most $3.00/month so they never bothered. And tenants cannot be evicted. Yes, water and heat included in rent ran more than the rent. The owner had the property for over 10 years, figure the tenant will die soon, or move to a nursing home, but had no luck. The main selling point is the 92-year-old will die soon, so they hope, and the unit would go under rent stabilization. It's a mixed-use property, but the commercial rents was not the best due to it's location.

While what I saw was a extreme example, owners found it more cost effective to leave apartments vacant, as the article points out if the rent cannot cover expenses. A friend of mine who bought a 32 unit building chose to only rent to illegal immigrants, who doesn't understand their rights, and tells them he would report them to immigration if they gave him any trouble. Investors putting money into these properties hope for changes to rent stabilization laws so it will be profitable.