Buying Multi-Family - No Lease Tenants

[Dennis D.]

Hi - I am looking to buy my first 3 family multi-family home in Astoria, NY. It is not rent stabilized.

I plan to live in one of the units, while continuing to rent out the other apartments.  The seller said the current tenants have no lease and rent month to month.

The seller also rents out the basement. It is not a legal basement, but apparently everyone seems to rent out their basement here in Astoria.

Looking for advice for any pitfalls here. Is it a problem that these tenants have no lease? What about the tenant that lives in the basement?

Can I ask the seller to put them on a lease first as part of the negotiations?

[Wesley W.]

As you know, NY is extremely tenant friendly.  If the basement is not a legal living space, I would not rent it out. As soon as there is any trouble with the basement tenant, they will run to the municipality and turn you in.  Every NY tenant, especially downstate has been completely educated via advocacy groups and TV/web ad campaigns on the ins/outs of wielding the legislative controls to take advantage of the uninformed landlord.  You don't need that hanging over your head with the basement tenancy.  Maybe you can live in the basement unit?

For the MTM tenants, I strongly recommend you generate your own lease with the help of a landlord/tenant attorney, but keep them on MTM.  I have posted in detail here in BOP why this is smart business in NY - feel free to search for those posts.

There are serious headwinds in NY to successful buy & hold investing, but if you can navigate the pitfalls, you can operate your business and generate income.  Good luck!