Advice on buying a Rent Stabilized multifamily in Brooklyn?

[Amani Clarke]

Hey guys, I've been looking at this property in Brooklyn. It's 7 units, 4 of them are vacant and 3 of them are occupied but it's rent-stabilized. One of the units is occupied by a senior citizen so I already know there's nothing I can do with that one. Still, I wanted to know if it's even possible to destabilize the other units and are the vacant units automatically destabilized since they're vacant? The building as a whole needs work also so I'm just trying to figure out if there are any restrictions that'll prevent me from doing rehabs on those vacant units while the other ones are still occupied. This will be my first investment property and I know NY is not an investor-friendly state but the cash flow with this deal makes it worth it to take it down.  Also, I'm getting into this as a creative finance deal. Any advice.

[Rickie Pringle]

You need to perform extreme due diligence before investing in Rent Stabilized properties in Brooklyn, NY ( NYC & NYS). Vacant units are not automatically destabilized if they were rent stabilized before they became vacant. In fact, there is currently no provision since the enactment of 2019 Rent Law that allows vacant apartments to be come destabilized in NYS. Your best hope is that the four vacant apartments are Market Rate apartments, which I doubt. You can contact HCR (DHCR), the NYS agency that regulates Rent Stabilized and Rent Control apartments in NYS and ask them for a report showing the status of each rent stabilized apartment in the building. In addition, you need to know the current Legal Rents in the records of HCR (DHCR) for each apartment as they will be rents that you will most likely be stuck with and you will not have the ability to increase rents to cover Rehab or your investment.

[Tim J.]

Without hearing the details its hard to make a specific recommendations, but frankly, being under rent control, that's a 'pass' for me. 

There is a reason the units are vacant - most likely because the current owner knows he/she will not get the rents to cover the costs of making them habitable. 

[Mohammed Rahman]

Hey @Amani Clarke - since you mentioned it's a creative finance deal, I'm guessing that's why you're able to overlook all the other nuances of destabilizing a rent controlled building. I have yet to come across a deal as an investor or broker where people were jumping at the chance to purchase a rent stabilized building. 

That being said, you can follow through with the steps NYC has in place to destabilize an apartment building but as far as I'm aware, a large portion of all the units need to already be vacant. 

Here's a helpful article: https://rew-online.com/how-to-...

[Xin-Ran Jiang]

Hi Amani, it been a year now, I am coming into a same condition with you. I’m investigating in a 6 units building in BK, it’s half vacant recently and the rest empty. I’m considering purchasing it and do some renovations to destabilize those empty units. How was your deal going, did you get that building?