All Forum Posts by: Jason Lee

I have around 70 landlord clients that only own condos in NYC. Most of them purchased all-cash and most only own 1 or 2 units. The few that have mortgages initially purchased as owner occupants.

If you're going to look at 2 beds I would try to find one that can be flexed to create a 3rd bed or create a sleep alcove/den so you can get higher rent. Or consider getting 2 studios. Smaller units will typically rent faster and often have higher cash flow.

Are you familiar with NJ landlord/tenant laws? I wouldn't necessarily count on a 30% rent increase. Look up "unconscionable rent increase." 

Lawful source of income is protected... BUT you can set other criteria you want and apply it to all applicants... minimum income, minimum credit score, background check, etc. The background/credit check cannot cost more than $20. My landlords use 40x the monthly rent for minimum income. 80x for guarantors. That's for A class tenants. Anyone getting a voucher can't come close to 40x.

Selling a property with tenants is much more difficult than selling a vacant one, and selling one that has tenants paying well below market rate is even harder. I would try to sell it vacant. You might want to speak to the tenants if you haven't already to take their temperature on what you're planning. If they're the kinds of tenants that will stop paying rent then they will also make it very difficult for you to sell. By law you must give them written notice you're terminating the lease at least 90 days prior to the end of the lease (if there is one), or 90 days notice if it's month to month. If they become difficult then you should consult a landlord/tenant attorney sooner and maybe get them to send the notice to terminate.

The tenants will not be able to buy the property (at market rate) and they probably won't know anyone that will. Most properties do not sell by word of mouth, they sell be being put on the MLS and marketed to the widest pool of potential buyers. Find a realtor that can show a successful history of sales representing the seller (you should be able to verify it yourself online). If the house needs work then a top selling agent can help you make minor improvements and/or stage the property (at minimal to no out of pocket cost) to get the highest sales price possible. You don't have to renovate the kitchens and baths but there are things you can do cosmetically to force appreciation.

Late to this thread but if it helps... I've sold many converted dining alcoves in co-ops and many agents I've run into have no clue what makes up a legal bedroom in NYC. Many are very seasoned agents and even seasoned sales managers and they don't know all the requirements. So yes, it's very possible your buyer's agent didn't know. 

How much do you think you overpaid? In general, if you can fit a bed in it, if it has a window, and if you don't have to walk through it to get to another part of the apartment, then most people will use it as a bedroom, whether or not it fits the legal definition. If you can do that, then most people will pay a premium over a one bed that isn't converted or cannot be converted. You should have paid more than you would have for a 1 bed with a straight living room, and less than a true 2 bed. Any future buyers will do a similar calculus.

Any market reports I see for JC are lagging and don't drill down enough by location. Your leasing agent should be able to tell you the market rent with active comps and recently rented comps with days on market pulled from Hudson MLS.

I have many condo investor clients in NYC. About half of them used to owner occupy and then either traded up or moved out of state and became landlords, the other half buy all-cash or 1031 from higher maintenance properties. If you’re going to be negative cash flow if you move out in a few years then I don’t think it makes sense. I’d be looking for something where you can force some appreciation and cash flow by converting an alcove or den to carve out another “bedroom.” If you can get a third tenant in there somehow it will rent for a pretty big premium over just two and then maybe the numbers will start to make more sense.

In NY law limit's security deposits to no more than 1 month's rent.

Is this unit in NYC? What lease did you use? Tenant typically has to pay the rent no matter what so they should be continuing to pay the rent until you find a new tenant. There should be no vacancy and in this market the tenants should be paying all the condo application fees.

New listings were down in April YOY, closed sales were down, days on market was way down, and median prices was way up. The average closed sales price in April was over the full asking for sfh, townhouses, and condos. It's a frothy market but rising rates and the volatility in equities should cool things down a bit.