So I recently sold my first real estate investment and made a nice profit. I am looking into possibly purchasing a small apartment building (5-8 units) in the West New York, NJ area. A lot of the rent rolls I have seen have some tenants at very very low rents. Based on this I am assuming there is some level of rent control in the town. Is there anyone who can provide some information on this and how it works? I tried reading the town codes myself, but it is difficult to translate it to simple terms. Just looking to see what the laws are and what exactly stops you from just letting a lease expire and getting a new tenant in. Any information is appreciated.
@Thomas Young This should help... https://www.nj.gov/dca/divisions/codes/publication...
Originally posted by @Thomas Young :
what exactly stops you from just letting a lease expire and getting a new tenant in.
Actually, that's not RC, that's the NJ anti eviction statute! All leases must be renewed, and rent raises cannot be "reprehensible", definition of that tbd by the judge hearing your tenant's appeal.
Read this carefully if you're going to own in NJ https://www.state.nj.us/dca/divisions/codes/publications/pdf_lti/t_i_r.pdf
Look up the town codes and find "establishment of rent control; exemptions." 5 units and above fall under RC. 4 and under could be exempt if you owner occupy. You'll be limited in the rent increases after a tenant vacates. You could possibly get an exemption if you gut renovate when a tenant vacates. I would call the town rent control board to ask specifics. Most of Hudson County has very strict RC laws. Union City for example, has gotten even more strict in the past year.
Here is the online publication as for the rent control ordinance in West New York, NJ: https://ecode360.com/7058071
There is some chance that the latter may have been updated and not posted online (towns tend to change their ordinance fairly often), please reach to the town to confirm. Per the above just 2-4 units owner occupied is not rent controlled. Exemptions apply to new construction, and substantial rehabilitation among others.
I do not see a reference to 'vacancy decontrol' (the mere moving out of a tenant allowing you to set new rents as you please) and likely there is no 'vacancy decontrol'.
Units rehabilitation and looks like in this case condo conversion (if rents are above $1000) may be potential routes for decontrolling the building.