Moving On

weve-moved

Dear anyone who has read anything on this blog:

I am happy to report that the reason for no recent posts is that I am now blogging for Century 21 Metropolitan, a New York City real estate firm. You can find my work at www.212century.com/blog/ or follow me at @nyrealestated on Twitter.

Thanks!

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Why Doesn’t Anyone Want Prepaid Rent?

giant check

In the last few months, I’ve had several people searching for a rental ask me if they could prepay a year’s rent. So what happened?

First, let’s talk about why they wanted to do that, and the answer is simple–they didn’t meet the landlord’s requirements for renting. As we all know, renting in New York City is hard. One of the toughest requirements for many people to meet is the 40x one month income bar. That means that if the rent is $2000/month, you must earn $80,000.  Now if you a) have been working for a few years in finance b) are a first year law associate at a large firm c) are a professional athlete, you can just shrug your shoulders at that minimum (and by the way, if you are any of those, you probably are not looking at $2000/per month apartments). If, however, you just graduated from college and have a non-paying internship, you’re a full-time student, you’re self-employed with variable income, you work for a start up and have more shares than weekly dollars, you have a working class job, or hey, you are an heir/heiress and you have plenty of savings, but no verifiable emplooymnt or income, well, then it’s a real problem.

Most people deal with this in two ways–they find a roommate (or roommates) whose combined income gets them all over the 40 times income bar, or they get a guarantor (guarantors are usually required to earn 80 times the one months rent). Those options weren’t available to the people I met, so they thought that they could get around the requirements by offering to prepay a year’s rent. And you know what? Most landlords didn’t go for it.

That seems crazy, right? I mean, why wouldn’t a landlord be thrilled to have the one lump sum payment? Wouldn’t it be nice to know they have at least one tenant taken care of, with no late payments, no missed payments, nothing to worry about. Done and done and done. But no deal–almost all of them said they preferred a guarantor, and one said that they would take a prepayment, but the tenant would still have to fill out the application and show some kind of reasonable income. Maybe a small landlord who is renting out shares of their two or three family house would have been willing to do it, or maybe a co-op or condo owner who is subletting might go for it (though the co-op board usually has to review rental applications and they might be as tough as a landlord). But your average building management company? No.

The renters (who both came from out of state and were not used to the obstacle course that is renting in NYC) were completely puzzled by this. One pair eventually scaled down their max rent until it met the requirements, ending up with a much smaller apartment and different neighborhood than they wanted. The other got a guarantor.

But it did make me think a lot about why landlords are so resistant to the prepayment offer. I did a little research, but didn’t find many answers. So here are the best guesses I came up with:

  • The landlord worries that for some reason the tenant will have to break the lease and the landlord will then have to pay back the tenant for the months not used. Landlords do NOT like writing checks to tenants.
  • Management offices just aren’t equipped to handle a tenant whose account is different than everyone else’s. I swear I’ve walked into some management offices that looked like they were straight out of 1994, with ancient computers and overstuffed filing cabinets and the occasional typewriter. I really feel for the poor administrativve staff working in these kind of places. So these places just aren’t cut out for things like “These numbered apartments get a bill every month, and these don’t, and was their lease renewed and they now DO need bills?” It’s not hard to imagine some kind of error happening where the billing department loses track of the fact that the renter has prepaid and starts sending out late notices and late charges to the tenant, creating a mess for both parties. I honestly think that’s the reason why landlords are reluctant to accept prepayment–just to avoid confusion.

    The moral of this story, then, is that if you were hoping to get around a landlord’s income requirements by prepaying, bury those hopes. A guarantor or roommates are still your best bet. And if you have enough cash lying around to prepay a year’s rent on a typically high-priced NYC rental, well, maybe you should see how far you are from a downpayment to buy an apartment…

What Is A Land-Lease Building…?

You see a listing at a price that seems too good to be true. A 2 bedroom? In Manhattan prime for $450,000? That must be a typo, right? Hmm, no, it looks legit. Well, it must need a gut renovation. Let me read that again…no, it actually HAS been renovated. Seriously, what’s the catch? Okay, that maintenance is high, but still…What’s this now? A note on the listing saying this is in a land-lease building? What’s a land-lease building?

Land...

Land…

...Lease

…Lease

A land-lease building is actually one of those things that is wonderfully what it sounds like. The owners of the building own the building, but not the land it is built on. Instead, they lease the land. This is typically found in co-op buildings (I doubt it would occur with a condo, but in New York real estate, never say never), which means the co-oop’s shareholders are responsible for paying the lease on the land. That’s why the maintenance charges for land lease apartments are so high–in addition to the the usual common charges, RE taxes, and any mortgage payments included in the monthly maintenance, there also is a charge to help pay the monthly land lease. And as you may guess, the lease rate on New York land is not exactly cheap. Plus the owner of the land has the co-op owners over the proverbial barrel during lease negotiations: “You don’t like these terms? Fine, I’ll sell the land. Hope your new landlord doesn’t want to tear you down.”

And that right there is why the prices are low. There is a feeling of instability that comes with a land-lease building, that when the lease is up, the land owner could say, “Hey, I don’t care what you’re willing to pay, I’m getting 80 kabillion dollars from Big Condo Developer to sell this land, and oh yeah, they’re going to raze the building.” The co-op doesn’t have 100% control over the property they own, which is why many people shy away from buying in a land-lease building.

So should YOU stay away from that incredible apartment with its high monthly charges? Here’s who I think should actually consider it: if you’re an all cash buyer, this might be a great deal for you. In most buildings, your amount of cash might get you just little one bedroom, but in a land-lease buiding you’ll get that spacious two bedroom you thought was out of your reach. Since you wouldn’t have a mortgage, you’d just have to deal with the monthly maintenance. And you think the monthly maintenance is high? You’ve seen rent in Manhattan, right? Chances are good that even though the maintenance charges are high for a co-op, they’re less than you’d be paying to rent a similar apartment in the same neighborhood.

Okay, so if you think you fit that picture, there are two very important questions you should ask:

  • How much is left on the current lease? If the lease runs until 2050 (and yes, I’ve seen some of these deals in place), then you’re probably safe, unless the building owner has some kind of out that can break the lease (put that under questions to ask the co-op). If the lease only has ten more years on it, I’d hesitate, no matter how much the co-op assures you that they have a good relationship with their land owner and plan to renew it easily as usual. I’d rather not be a shareholder in that building to find out that this time is going to be different.
  • I would also ask about the sublet policy. If they allow subletting with relatively few restrictions, then you can make some money off the apartment if you decide you’re not comfortable with the situation. Even with the high maintenance, you’ll still turn a profit because as I said, rent in Manhattan is just crazy.

So land-lease building, yea or nay? Don’t dismiss it immediately, find out the facts, think about your finances and your tolerance for some instability in exchange for a good deal, and of course, discuss it all with your broker ( who may have some dirt on the building that the seller isn’t anxious to share).

The Worst Building Name in New York City?

What’s your address? Most of us would just answer that with a number and a street name, but some New Yorkers have the added cachet of an elegant building name. Well, maybe a bit of cachet. Maybe not so much elegance.

The truth is that a lot of building names aren’t exactly magical. Oh sure, there are the classics that conjure visions of 20th century glamour–the Dakota, the San Remo, the El Dorado, the Beresford, London Terrace, River House–but many building names don’t conjure anything other than, “Oh yeah, it’s right on the awning…I can picture it. It begins with an A. Or a W. I think.”

The Dakota, one of the New York City building name classics.

The Dakota, one of the New York City building name classics.

Forgettable, indeed. When I think about the worst building names in New York, most are bad simply for the sin of dullness. There’s a focused-group-to-death sound about them, as if some marketing team took syllables from other well-regarded buildings, threw them together and came up with something like “Dakesford Terrace House.” Actually, that’s a lot more colorful than many of the new names, which all too often seem like variations on meaningless prefixes and suffixes  like “the Altion.”

Nevertheless, here is my choice for the worst building name in New York, along with some honorable mentions. Note: This is NOT, I REPEAT NOT (in caps and boldface, no less) about being a bad building, a poorly run building, ugly building, or uninhabitable building. It is merely a case of something I’ll call “Awning Dysfunction.”

The Oliver Cromwell – If you’re not up on your English history, the name Oliver Cromwell may not mean much to you. In short, Cromwell (1599-1658) was a devout Puritan who became one of the leaders of the English Revolution. Despite a complete lack of military training or background, he rose to become the commander of the revolutionaries’ New Model Army that played a major role in defeating King Charles I’s Royalist forces. He was on the council that signed off on the order to execute King Charles I, and led campaigns against Catholic-Royalist uprisings in Ireland and Scotland. He eventually was asked to become leader of the new government. Calling himself “Lord Protector,” Cromwell spent most of his brief five year reign trying to stabilize the country’s government and economy after the chaos of the revolution; he also attempted moral reforms in the model of his own austere (i.e., drab and dull) godly lifestyle. His son Richard took over the role of Lord Protector after Oliver’s death, but he lacked leadership skills and was forced to resign after about a year. Soon Charles II, son of I, returned to England and retook the country, which was grateful to have anyone in charge at this point. King Charles II restored the monarchy, as well as theaters, parties, long sexy curly hair for men, serious cleavage for women, and plenty of  bright colored satin, lace, and brocade for all. Whew. That was close. I don’t know if we ever would have made it to Swinging London in the 1960s without fun time monarchs like Charles II.

(Oops, sorry, wanderd off a bit there. Anyway.)

Cromwell is a very complicated figure in British history. He didn’t start the revolution with an eye on taking over the country–he just turned out to be one of the more competent people involved in fighting it. He didn’t plan to execute Charles I–in many ways, Charles I backed the revolutionaries into a corner where they had little other choice. His biggest claim to infamy is the campaign in Ireland, a bloody mess where many civilians died. It’s unclear what role he played in leading those killings or what kind of orders he may have given, so you could argue that that wasn’t his fault. However, if you argued that he was the leader, so whatever happened on his watch was his fault, well, I personally wouldn’t fight you back.

That head over the entrance is supposed to be Cromwell. Since his body was exhumed three years after his death, hanged, then his head put on display outside Westminster Hall for 24 years, this feels like an awkward tribute. Maybe the Spanish hat helps?

That head over the entrance is supposed to be Cromwell. Since his body was exhumed three years after his death, hanged, then his head put on display outside Westminster Hall for 24 years, this feels like an awkward tribute. Maybe the Spanish hat helps?

(I should note, that if you would like more background on the English Revolution, there are many books on the subject: Christopher Hill’s books The Century of Revolution 1603-1714 and The World Turned Upside Down are solid, and John Adamson’s The Noble Revolt: The Overthrow of Charles I is a fairly recent effort that looks good, which I just put on my reading list. For you audio learning fans, I highly, highly recommend Mike Duncan’s enormously entertaining and informative Revolutions podcast, found at www.revolutionspodcast.com and iTunes. For anyone in a hurry, well, there’s Wikipedia.)

Whew!! Now back to buildings. So after all that, I hope you’re thinking what I was thinking the first time I saw “The Oliver Cromwell” on a green awning outside an Upper West Side building: “Why on earth is a New York City building named after Oliver Cromwell?” The answer is that there isn’t a good answer.

The building was designed by eminent architect Emery Roth. Completed in 1927, the Oliver Cromwell is described a “Spanish Revival style” high rise, which would make Oliver Cromwell want to poke needles in his eyes, considering his hatred of the Spanish Catholics, who were the mortal enemies of Protestant England. Roth was apparently responsible for choosing the name for the building, and included what was supposed to be an image of Cromwell over the entry way. Unfortunately, the image features Cromwell dressed like a 17th century Spanish naval commander, ready to lead the armada against England. This is indeed a puzzlement. It makes you wonder if Roth knew who Cromwell was. Then again, considering that some of Roth’s other Upper West Side buildings featured Spanish names like the El Dorado and the San Remo, maybe it was all part of an elaborate joke.

So all in all, I’m afraid I must pick the Oliver Cromwell as my worst building name in New York, simply for the sheer lack of sense. Now it’s certainly a nice enough looking building in a fantastic location (CPW and 72nd St!!), in fine condition with friendly doormen, so don’t let the name stop you from thinking about buying there. Well, unless you’re Irish. Then you might want to think about it.

Honorable Mentions:

The Visionaire – I’m pretty sure my grandmother had a refrigerator called “the Visionaire.” Great refrigerator, solid, lasted like thirty years. Oh wait, maybe it was called the Frigidaire, or something like that. Whichever, there’s no way to get around it–Visionaire sounds like a mid-20th-century line of kitchen appliances rather than an environmentally friendly Battery Park City building.

The Visionaire--does it come in avocado?

The Visionaire–does it come in avocado?

The Wilbraham – It’s actually a lovely, late 19th century Flatiron building, but I can’t say I’m terribly fond of this name. It sounds like one of those mashups that occur when you can’t decide whether to name the baby after Grandpa Wilbur or Grandpa Abraham

The Stack – I picked this one mostly because it’s marketing team once sent around an email that referred to the building as “The Sack.”

Getting Started: How Much Cash Do I Need To Buy in New York City?

Piggy Bank

Oh no. There it is again. Your landlord is raising your rent to some ungodly number just so you can have the privilege of living in a top floor walk up in a building where the amenities consist of a door. Is it time to buy?

It certainly is! Of course I always think it’s time to buy, mostly because a) New York real estate is always a good investment and b) it sucks being a tenant. So the real question now is CAN you buy? How much money do you exactly need?

Let’s imagine that you found a $500,000 apartment with $1,000 a month maintenance charges (numbers chosen for easy math, like the kind I can do without a calculator). You know you’ve got the paycheck to cover your monthly mortgage payments and maintenance charges, but that’s all in the future. How much cash do you need to have on hand now just to get approved by a co-op board and close on your $500K apartment?

Down Payment Most co-op and condo buildings in New York City require a down payment of 20% of the purchase price. There are some that require more, like 25% or even 35% (these buildings tend to be found on the Upper East Side). Occasionally you may find a condo that only requires 10% down or even an FHA approved building that only calls for 6%, but I wouldn’t plan my sales search with those numbers in mind.Let’s go with the 20%:

20% of $500,000 = $100,000

Closing Costs A lot of things are covered in the big category called closing costs: attorney fees, title fees, court recording fees, any move in fees the building may require, etc. The amounts for each of these things can vary widely, so it’s pretty much impossible to give anyone a definitive number before the closing; as you get closer to the date your attorney may be able to give you a clearer estimate, but I would feel safe if I set aside $10,000 to cover everything. That may be way too much–it could be as little as $5,000–but I’d rather overestimate than underestimate. And if you end up with extras, you can go buy some candy (or a drink, because nothing says, “I need a drink” like a few hours of handing over large checks to attorneys).  So let’s say you need another $10,000

$100,000+$10,000

Savings to Impress the Co-op Board You’ve probably heard stories about co-op boards analyzing your reference letters for signs of character flaws, or asking difficult personal questions at interviews to find out if you will be the right kind of neighbor, but you know what they’re really interested in? How much money you have. You could have the best personality in the world and the heart of a saint, but if they don’t see that you a serious amount of liquid assets, that won’t matter one bit. Co-op boards want to be sure that if you lose your job, you’ll be able to cover your monthly maintenance fees for a year or two; The amount of years will vary from building to building. The seller’s broker should be able to give you some idea of how much the board would like to see. If it looks like you don’t have enough, someone will let you know; no one wants a buyer to go through the process of filling out a board package and waiting weeks for word on that if there’s little chance the buyer will pass financially. That would be a waste of time for both the buyer and seller. Let’s go with the two year number for our sample case:

$100,000+$10,000+$24,000

…and Something Extra The co-op board won’t be that impressed if you only have $24,000 saved because they won’t believe that you may not do something like, oh, I don’t know, buy some furniture for that new apartment. Let’s throw in another $10,000 (and that’s probably skimping on things) just to show that you’re not going be pushed down to nothing if you have to tap into those savings.

$100,000+$10,000+$24,000+$10,000

Okay! Time to add it up:

$100,000 + $10,000 + $24,000 + $10,000 = $144,000

So yeah, to buy that $500,000 apartment, you probably should have about $144,000 easily accessible to you. Does that sound doable? Of course it does (provided you don’t work in the arts–but you knew that already). Now get ready to say goodbye to your landlord!

Stacks of Cash

Open Houses: What to Do, What to See, What to Ask

Look, old time New Yorkers waiting to go to an open house at a brownstone...Oh, they're waiting for word about the Titanic. Never mind.

Look, old time New Yorkers waiting to go to an open house at a lovely brownstone…Oh, they’re waiting for word about the Titanic. Never mind that.

The weekend is here! I bet you’re planning on spending part of yours indulging in New York’s second favorite Sunday activity: going to open houses. (Brunch is the first favorite Sunday activity. I know I didn’t even need to tell you that.) If you are, here are some tips for getting the most out of your tours of apartments.

Take your own photos Sure, the broker is going to give you a lovely show sheet with professional photos showing the apartment at its best. Take your own photos to show what it looks like today. You may also want to take pictures of things that the broker didn’t think were important…or didn’t want to show.

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Renting An Apartment in New York City–With a Pet

Okay, you have a dog or a cat or you plan to get one (or two–friends are great). That’s great! Life in New York is better with pets. Now how does that complicate your apartment renting experience?

Pet Friendly Buildings – Check Your Lease

Okay, so you found a building that you have been told is pet friendly and you’re ready to sign the lease. MAKE SURE YOU READ THE LEASE. Landlords often use generic leases and some of these have “no pets” written into them. The landlord might not even have noticed this because he (or an assistant) just printed a bunch f standard leases off the Internet without really looking at them. If you see that the lease says “no pets,” point it out, cross it out, and get the landlord to initial it. Better yet, get a pet rider added to your lease. Why is this important? Your current landlord might be okay with pets, but what if the building is sold? The new landlord might not want to have a pet friendly building, or might be looking for ways to get out current tenants so they can renovate your apartment and then rent it out at a higher rate. When the building is sold, the new landlord has to abide by the terms of the leases of the previous landlord. The new owners CANNOT tell you, “This is now a no pet building, either get rid of your pet or get out.” They also can’t start charging you a “pet fee” if your previous lease did not include one. (And for heaven’s sake, make sure you keep copies of your leases!!)

“No Pet” Buildings and the Three Month Law

Now what if you moved into a building that you were told was a no pet building, but you notice that other tenants have dogs or cats? This happened to me. I moved into a no pet building, but then realized that there were clearly a number of dogs in the building–at one count nine dogs in a twenty-four apartment building. The super’s family even had a dog. After a few years of staring longingly at my neighbors’ dogs (my roommate was allergic to cats, so that was out), I wondered why I couldn’t get one too. Luckily I happened to be working with someone who knew a lot about having a pet in New York, and he told me about the “The Three-Month Law” or “Pet Law.”

Officially known as ” Section 27-2009.1 of the Administrative Code of the City of New York,” (read the whole legalese here), this law essentially states that if your landlord or an agent of your landlord (the building super, a doorman, a plumber who comes to fix something in your apartment, etc.) sees that you are “openly and notoriously” (that is, not hiding) keeping a pet, he or she has ninety days to lodge a complaint. If the landlord does not file a complaint within those ninety days, you can keep your pet, free and clear.

Open...

Open…

In order to protect yourself, start accumulating evidence that you are “openly and notoriously” keeping a pet as soon as you adopt your dog or cat. Adoption papers and vet records are a good start, but photographs can really help you out. Put your dog or cat (though really, no one should have any problems with a cat in an apartment–why wouldn’t a landlord want to have help scaring off rodents?) in open and notorious situations, like on your building’s front steps, in front of your apartment door, with neighbors, and photograph him or her. The date stamped photos will provide bullet proof evidence that you are not hiding your pet and that you made it through the ninety days without any complaint.

...and notorious.

…and notorious.

(Of course this is all with the understanding that your pet is well-behaved and not causing a problem with your neighbors. If your dog is anxious and tries to bite people in the elevator, you have a problem. If your dog barks all day while your at work, you have a problem. If you are hoarding thirty cats and the smell is seeping into the hallways or the apartment next door, well, you have a lot of problems. Be a responsible pet owner and make sure your pet is a good neighbor.)

Final Thoughts

  • I will remind you again that the best thing to do is find a pet friendly building. They are out there and I haven’t noticed any difference in the rental rates between no pet and pet friendly buildings. If you have a broker who says that it’s too hard to find a pet friendly building or that there are “hardly any in New York,” find a different broker who understands how important your current or future pet is to you.
  • Don’t let a landlord evict you or try to make you get rid of your pet if you believe you are keeping your pet legally. Just google “NYC pet lawyers” and you’ll find help. Even if you think you can’t afford to hire a high-powered lawyer to take your landlord to court, you still may be able to find someone who will help you. I’ve found that the lawyers who specialize in this area are very willing to help in any way they can, even if it’s just tipping you off to the finer points of a law that might be enough to make your landlord back down.
  • And finally–If you do decide to go the route of bringing a pet into a building that isn’t “officially” pet friendly, then I am begging you with all my heart to please make sure you have a back up plan in case you can’t get your pet through the ninety days. When I decided to take that risk in my first apartment building, I did it with the knowledge that my parents would let my dog or me and my dog live with them until I found a new apartment that would allow me to have her. Please don’t put yourself in a situation where you may have to bring your dog or cat to a shelter. It is sad to see any dog or cat in a shelter; it is twenty times as sad when you look at them and know they have memories of a home where they were loved and don’t understand why they are no longer there.