Vacant apartment questions

[Freeman Schultz]

In New York City a common practice among some landlords is what referred to as "warehousing" where they take vacant apartments off the market because it is less profitable to rent them out.

Another reason why apartments stay vacant is that landlords refuse to lower the rent.

How do landlords make money with vacant apartments? Rule of thumb is that apartment needs to cash flow in order to make a profit.

Are there any benefits for keeping an apartment vacant?

The only thing that comes to mind is sales. Some buyers want to buy an investment property that is vacant.

[Wesley W.]

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.