4 family acquisition in East New York

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4 family acquisition in East New York

Philip Germain
Brooklyn, NY · Member since 2017 · 2 posts · 0 votes

Hello,

My name is Philip. I am a new investor in East New York Brooklyn NY. I used the FHA 203k to buy my first mixed use in Brooklyn last year with a small commercial space and three one bedroom units for 575k. Currently cash flowing 2500 monthly.

I recently signed a contract for 800k to buy 4 units a couple blocks away (I like to have my units close together). When I first saw the property I was told that it would be delivered vacant. However, on signing the contracts the sellers attorney told me that only one unit will be vacant. The other rental situations are as follows:

Units 1: Is a one bedroom paying 1150 cash paying tenant. The seller had a voucher but is no longer on a program and now paying cash. Lease expired

Unit 2: Is a two bedroom paying 1349 Section 8 tenant. The seller has a voucher for their security. Lease expired

Unit 3: Is a two bedroom paying 1397 cash paying tenant. The seller has a cash security deposit for them. No lease

Unit 4 delivered vacant.

I would like to raise the rents of to at least 1600 per unit for two bedroom and 1350 for a one bedroom.

I have heard many different things about eviction or raising rents for section 8 tenants or programs with vouchers. I have never done either so I'm hoping the BP community can weigh in on the situation.

Question

1) Can I just raise the rent on the section 8 tenants

2) How does eviction process work

3) Will it be hard for the section 8 to be transferred to my name if I do decide to keep the tenants

4) Does anyone know what the market rent is for East New York

Any assistance with this is highly. I am also looking to do meet ups and network ideas specifically in East New York.

My theory is to focus on one area and try to get the most out of it.

Thanks BP

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  • Francesco G.
    Rental Property Investor · Scotch Plains, NJ · Member since 2016 · 98 posts · 54 votes
    9y
    I recently purchased a fourplex in NJ and inherited 4 tenants. One is section 8 with part of the rent being covered by the tenant. It was actually very easy. Speak with the tenant and find out who the section 8 contact is and they'll provide all the paperwork you need. In NJ you can't evict or ask someone to leave just because you are selling and the new owner wants it vacant in buildings with 4 units or more and in some cases 3+ if not owner occupied. Not sure about NY. As for raising the rent on the section 8 tenant, you'll probably have to wait until their term is up and request an increase and sign a new agreement with the tenant. I let my contact know I was raising the rent a certain percentage and they approved. Then you send them a copy of the new lease. Usually you need to do it by a certain date each year (i.e. 60 days prior to expiration of the term). Raising the rents on the non-section 8 tenant s will depend on when their leases are ending and also if there is rent control on your city. If they're month to month you can send a notice (usually min 30 days notice) prior to next rent payment.
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  • Philip Germain
    OP
    Brooklyn, NY · Member since 2017 · 2 posts · 0 votes
    9y

    @Francesco G. Thanks for your input! 

    I have been speaking some other people and they are telling me that it can really be a headache to raise their rents.   I was told that there are two different kinds of section 8 tenants. Those who contribute a portion of the rents while there are others who solely rely on section 8 to pay the entirety of the rent.  I think the tenant who is paying 1397 is the latter.  

    I honestly am a bit worried that since the leases are expired that section 8 wont renew at a higher rate unless I sign a lease. I have my reservations about keeping older tenants.  What are your views on keeping older tenants?

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  • Francesco G.
    Rental Property Investor · Scotch Plains, NJ · Member since 2016 · 98 posts · 54 votes
    9y

    Yes, you'll need a lease to raise the rent.  They'll want a new one in place with the new rate.  I would contact them and see what the allowable increase will be and go from their.  Can't hurt to try, if not you can try to end the tenancy and find someone new.  

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