"New" NY Tenant Protection Laws - Still Worth Investing in NY?
Rental Property Investor · Smyrna, GA · Member since 2018 · 974 posts · 645 votes
"New" NY Tenant Protection Laws - Still Worth Investing in NY?
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Rental Property Investor · New York City · Member since 2014 · 208 posts · 271 votes
7y@Joseph Firmin
I’m a New Yorker who is NOT touching NY. It’s a landlord’s nightmare. After all, we are just evil capitalists taking advantage of the poor renters.
I have a 4-family in Brooklyn and a house upstate. I’m done, and now focused on passive multifamily in markets where people from the NE are moving.
49 Replies
- Los Angeles, CA · Member since 2013 · 555 posts · 261 votes7y
Duty to mitigate... welcome to what we have in most other states.
Security dep 1 month... ouch.
Application fees, Background check... Corelogic myrental.com provides a la carte for <$10. Also Naborly is free.
Other than sec dep, I think it's pretty fair. LL's can have a nice side hustle for application fees if they get lots of interest.
I never charge anything for initial application screening.
Oh, but the Eviction rules are just stupid. Stay for warrant 1 year?! So they just get to squat in your house for 1 year.
They should just send all these squatters to the Governor's mansion for 1 year. They have enough room.
Originally posted by @Mike Franco:
They should just send all these squatters to the Governor's mansion for 1 year. They have enough room.
He is literally never there. Spends all his time in NYC.
- Rental Property Investor · Smyrna, GA · Member since 2018 · 974 posts · 645 votes7y
@Vitaliy Volpov Thank you for your post! I'll definitely check out your video! Much appreciated!
@Joseph Firmin I can only to talk for NYC which is where the new laws have been primarily aimed at. Everyone is readjusting their calculations and strategies, some are still a bit shocked how the new laws went right through so smoothly. Those who don't feel comfortable owning with the new laws and what else the new political movement has in mind for 2020 and beyond are in fact exiting to other more landlord and business friendly states. It really depends on your investment profile.
The investors who recently bought property at prices which couldn't possibly cashflow at the current rents, who bought with intention to significantly raise the rents have been burned badly. Also those who secured large mortgages based on future projections, with the assumption that rents will be significantly raised over the next few years are underwater now.
Current property owners who don't plan on exiting the market and any new entrants all have one thing in common - deep pockets, to survive non paying tenants who destroy the property and can take a year or longer to be evicted and tight caps on rent increases among other new restrictions.
- Rental Property Investor · Phoenix, AZ · Member since 2013 · 919 posts · 911 votes7y
Damn. I am somewhat surprised that the new laws apply to ALL landlords. Usually these goofy laws apply to corporations, or ppl w more than x number of doors, etc.
It seems to me this law will drive prices higher so LL can hedge their risks. How does this make renting more affordable? :-(
@Alan Grobmeier You are actually on to something, although it is affecting everyone, some of the restrictions only apply to buildings with six or more units.
As an aside, the RSA (Rent Stabilization Association) which represents over 25,000 landlords in NYC has recently commenced a lawsuit against the city for violating property owner's constitutional rights of owning property. Essentially, they are saying the new laws amount to a "taking" of property by the government which the government would have to reimburse for. Likely going to wind it's way through federal court. It's a long shot to say the least, more of a political statement.
- Investor / Broker · Brooklyn, NY · Member since 2016 · 665 posts · 1k+ votes7y
Hi Alan!
That's exactly correct! The new laws affecting ALL of NY State as well as New York in general will basically benefit the existing rent regulated tenants and absolutely drive up the rents on Market Rate Apts.
It effectively makes renters who are not "Lucky" enough to already be in a rent regulated apt to pay for those that are lucky enough.
Either case, my strategy has always been to never buy Rent Regulated buildings and to stay at 4 Units or under.
There has been exceptions where small multi's has become rent regulated, for instance, SF in 1994 did exactly that.
I'm don't believe this will be NYC's future, but you just never know.
If I were to bet, market rate buildings will first skyrocketed before there will be enough of a build up of support to regulate even buildings less than 5 units.
I'm watching the Politics very carefully. - Investor · New York City, NY · Member since 2015 · 388 posts · 563 votes7y
Interesting discussion. @Alan Grobmeier, there are plenty of 5-6 unit brownstones in NYC. I wonder if owners will be able to dodge part of these regulations by combining 2-3 units and turning their brownstones into 4-unit buildings? If so, I’d expect a wave of such conversions, reducing unit counts and raising apartment sizes/rents.
Rent control laws, meet the law of unintended consequences.
- Rental Property Investor · Phoenix, AZ · Member since 2013 · 919 posts · 911 votes7y
@Llewelyn A., @Michael Gansberg, @Wy Kay: I watch what happens in NY & Pacific NW. Most of my properties are in AZ, but I do have a property in San Diego. And California operates like a nation of its own at times.
Some of the crazy stuff that comes out of these places is truly amazing. In most instances, however, the laws are aimed at the ‘big guy’. But that makes it more unaffordable for most of the rental population. Any law, rule or fee will be (eventually) passed to the renter. And the big guys will find loopholes to do just that. ;-)
Originally posted by @Wy Kay:
@Joseph Firmin I can only to talk for NYC which is where the new laws have been primarily aimed at. Everyone is readjusting their calculations and strategies, some are still a bit shocked how the new laws went right through so smoothly. Those who don't feel comfortable owning with the new laws and what else the new political movement has in mind for 2020 and beyond are in fact exiting to other more landlord and business friendly states. It really depends on your investment profile.
The investors who recently bought property at prices which couldn't possibly cashflow at the current rents, who bought with intention to significantly raise the rents have been burned badly. Also those who secured large mortgages based on future projections, with the assumption that rents will be significantly raised over the next few years are underwater now.
Current property owners who don't plan on exiting the market and any new entrants all have one thing in common - deep pockets, to survive non paying tenants who destroy the property and can take a year or longer to be evicted and tight caps on rent increases among other new restrictions.
I'd love to feel bad for an owner getting screwed by unfavorable laws, but in this case I don't. How people didn't know that an ultra blue area, with super friendly tenant laws (and low cap rates to boot), wasn't going to have worse landlord laws in the future is beyond me. People made bad decisions with all the data in the world to stop them. Did it anyway.
@Cody L.
Agree. Would only add that most simply got too comfortable with the way it usually was in Albany since going all the way back at least to the 1950's. The real estate lobbying groups were well funded and very influential, they practically had all the Republicans and plenty of Democrats in their back pockets in the Senate. Everyone was sure something would change at the last minute and only a watered down version would make it through. They were dead wrong this time. It's a new era, with young, active, left leaning and minority voters changing the game rules, not just in NYC but across the country.
- Professional · Parsippany, NJ · Member since 2013 · 384 posts · 262 votes7y
Gov Cuomo is a scumbag
- Investor / Broker · Brooklyn, NY · Member since 2016 · 665 posts · 1k+ votes7y
I don't think this is a RED versus BLUE when you consider that in States that do not have a housing Shortage, there really isn't a need for rent control. Red States tend to have much more affordable housing than Blue States, I believe.
The real problem is that Wages have effectively been stagnating over decades while Shelter has steadily increased for both Ownership and Rent.
Where there are much larger population, there is a change towards renting rather than owning because the most recent TWO generations actually cannot afford to purchase a home.
That lead to a huge increase in Renters.
With the YUGE increase in Renters, naturally, there will be a push to enact laws that are biased for Renters... at least seemingly biased (we know that virtually all Economists predict that Rent Regulations will inevitably cause the remaining market apt rents to rise as well as a extreme time frames to get a rent regulated apt which can be as much as 30 years).
My guess is that if Red States start shifting towards renters from Home Ownership in general, over time, they will begin the process of implementing some sort of rent regulations eventually.
SO.... my thoughts, which can be wrong, I admit, is that once the population of renters reach a high majority over home owners AND there is a significant shortage of affordable renting options, rent regulations is inevitable.
The only way rent regulations will not happen is if there is either no short supply of apts for the large demands of renters.
So is it Red versus Blue or is it Renters versus Landlords?
I think there needs to be a distinction because I don't think this is Political. It's more about desparation of the Renters not whether or not you are a Conservative or a Liberal.
If you are Liberal and you studied Economics to understand the issues better, I'm sure the only conclusion you will reach would be that there needs to be more relaxing of Zoning and other restrictive building codes in order to increase supply of apts which will have a much fairer and better effect on affordability.
Just my 2 cents! Well, if apartments are in short supply and the cost of living is untenable in an area, people should MOVE. Never before in the history of the world has the globe been so figuratively small from commerce standpoint. People are telecommuting, running online only businesses, etc. It's a very basic supply and demand equation with housing. Unfortunately, the inflated rents are due in large part to the higher taxes and regulation that the property owners must deal with, and that cost is just passed on to the customer.
Originally posted by @Wy Kay:
@Cody L.
Agree. Would only add that most simply got too comfortable with the way it usually was in Albany since going all the way back at least to the 1950's. The real estate lobbying groups were well funded and very influential, they practically had all the Republicans and plenty of Democrats in their back pockets in the Senate. Everyone was sure something would change at the last minute and only a watered down version would make it through. They were dead wrong this time. It's a new era, with young, active, left leaning and minority voters changing the game rules, not just in NYC but across the country.
I
I don't disagree with what you said at all. But while I might feel bad for someone that buys in a more freedom supporting area, and then gets blindsided by anti freedom radicals, it's harder to have the same sympathy for people that invest in areas that are already hostil. And not only that, they pay a PREMIUM to invest in a property owner hostile area.
- Rental Property Investor · New York City · Member since 2014 · 208 posts · 271 votes7y
@Joseph Firmin
I’m a New Yorker who is NOT touching NY. It’s a landlord’s nightmare. After all, we are just evil capitalists taking advantage of the poor renters.
I have a 4-family in Brooklyn and a house upstate. I’m done, and now focused on passive multifamily in markets where people from the NE are moving.
- Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes7y
@Joseph Firmin
Some Upstate cities are thinking about rent control I.e Syracuse, Ithaca, and a few others. A lot of landlords are nervous to the new changes.
Originally posted by @Cody L.:
I don't disagree with what you said at all. But while I might feel bad for someone that buys in a more freedom supporting area, and then gets blindsided by anti freedom radicals, it's harder to have the same sympathy for people that invest in areas that are already hostil. And not only that, they pay a PREMIUM to invest in a property owner hostile area.
Well, for what it's worth - and anyone who doesn't live in NY would have no reason to know this - but NY is quite RED in almost all places north of the Tappan Zee. Except for some liberal pockets in a few of the large cities, it's pretty conservative. Unfortunately, the population density being what it is, the NYC tail consistently wags the Upstate dog.
What is different this time, is that instead of implementing the progressive entitlement agenda in the 5 "blue" boroughs of NYC, with a stroke of his pen the governor has imposed that agenda on the conservative Upstate region. And without much input or dialog. (Which is how Cuomo does business.)
That's what's got people in stitches. Sure, we avoided buying into the heavily-regulated real estate of the NYC proper, because for decades the Upstate regions were permitted to pass their own laws/regulations by county and/or municipality based on the local conditions and needs of their constituents. But now, every RE owner in NY is being measured with the same stick, and since the political leanings, philosophies on entitlement, and way of life of NYC compared to Upstate are EXTREMELY different, one size most definitely does not fit all. To carry the analogy further, the Upstate NY landlords are feeling quite restricted in these new clothes we've been forced to wear.
I'm afraid that these new regulations will continue to drive entrepreneurs (RE investors, specifically) out of NY, taking their tax revenue with them. Those that remain will be dissuaded from investing in the blighted areas of the inner cities because of the enormous business risk they now face with the new tenant "protections" in place. Those properties will not be contributing to the tax rolls, and will probably have to be razed (at taxpayer expense) to avoid vandalism or liability concerns.
Meanwhile, the largest segment of people moving IN to NYS are non-tax payers that continue to put a strain on the state's resources. This is not a political statement. There is plenty of data that shows this.
There will be a margin call in NY in the future, where there will be too many people riding in the back of the wagon and not enough people up front to pull it. But the politicians don't care as long as that happens after their career is over. Yes, the proverbial "kicking the can down the road."
- 7yMatthew Irish-JonesBusiness MemberReal Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
@Joseph Firmin I don't know if an emergency meeting is necessary LOL. They are definitely tenant friendly laws but... business and investing will not shut down in NY, its a fairly large state.
Their are all kinds of government programs, and all kinds of ripple effects they have on the economics of housing, renting, investing, etc...
These particular laws may cause investors to leave the state, or skip the state when analyzing, that will create less competition, and allow whoever is less more inventory to pick from. I understand it's a global economy and investors can invest anywhere but, the new laws are really only an adjustment to a line item. Evictions will take longer and cost more so you should adjust the % calculation when analyzing.
As for the ripple effect overall on the rental market, and how where the competitive advantage will be found... I don't know, we will see. There are still a lot of investors buying property in NY though and making money.
Irish Jones Realty4.947 Reviews Originally posted by @Wesley W.:
Originally posted by @Cody L.:
I don't disagree with what you said at all. But while I might feel bad for someone that buys in a more freedom supporting area, and then gets blindsided by anti freedom radicals, it's harder to have the same sympathy for people that invest in areas that are already hostil. And not only that, they pay a PREMIUM to invest in a property owner hostile area.
There will be a margin call in NY in the future, where there will be too many people riding in the back of the wagon and not enough people up front to pull it. But the politicians don't care as long as that happens after their career is over. Yes, the proverbial "kicking the can down the road."
I see. Fair enough. I didn't think of it that way. Thanks for making me see it in a different way.
- Professional · Parsippany, NJ · Member since 2013 · 384 posts · 262 votes7y
Originally posted by @Cody L.:
Originally posted by @Wy Kay:
@Cody L.
Agree. Would only add that most simply got too comfortable with the way it usually was in Albany since going all the way back at least to the 1950's. The real estate lobbying groups were well funded and very influential, they practically had all the Republicans and plenty of Democrats in their back pockets in the Senate. Everyone was sure something would change at the last minute and only a watered down version would make it through. They were dead wrong this time. It's a new era, with young, active, left leaning and minority voters changing the game rules, not just in NYC but across the country.
I
I don't disagree with what you said at all. But while I might feel bad for someone that buys in a more freedom supporting area, and then gets blindsided by anti freedom radicals, it's harder to have the same sympathy for people that invest in areas that are already hostil. And not only that, they pay a PREMIUM to invest in a property owner hostile area.
I agree!!! It is in fact the BLUE states which have messed up Tenant Rights i.e. NYC, New Jersey (my state) Illinois VS Texas, Arizona which are Red States....Additionally NEWARK NJ is adopting RADICAL tenant rights from NYC and SAN FRAN which are FAR LEFT BLUE CITIES
- Rental Property Investor · Raleigh NC · Member since 2015 · 90 posts · 30 votes7y
NY is losing 50,000+ residents a yr. Why? Because of democratic policies and taxing businesses to death. Another reach into the working mans pocket.
I've listed all of my homes and will ne moving my investments south. Which is where everyone is moving anyways.
keep voting blue NY!
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