Upstate New York Landlords Unite!

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Western and Upstate NY Landlords,

My YouTube video call to action  https://youtu.be/gi2wh6JEddg

I have to say that this is our fault. While we have been keeping our heads down focusing on running our businesses and revitalizing housing inventory in our communities; someone else has been controlling the narrative of housing in Western and Upstate NY. The tenant’s unions have been strong and well organized; and consistently painting THEIR picture of housing to Albany. To exacerbate the negative image of investors and developers even further, we have the countless stories like those of Peter Hungerford and Rochester Asset Management that have been used as powerful ammunition in their fight. Rochester and other upstate cities are NOT controlled by unscrupulous landlords. Many of us use real estate to build long term wealth for our families or as an alternative to Wall Street products in our retirement planning, a vehicle to pay for our children’s college education, etc. Most of us are responsible, ethical, hardworking landlords, who take care of their properties and fulfill the incredibly important need for safe, affordable, quality housing in our communities.
When we stay silent, we lose control over the narrative and policies that get enacted like the ones on June 14th. Which, by the way, are going to disproportionately hurt those who it was intended to protect.
And it already has… I’ll give you an example. We own Rochester property in primarily affluent white neighborhoods think Park Avenue, Southwedge, North Winton Village etc. I just had a young lady recently who applied for one of our apartments. She was gainfully employed, had a decent income, but her credit history was horrendous. Our screening software denied her application, but I could see that she consistently worked two jobs and felt that I could take a chance on her where no other landlord would (she had been looking for apartments for a long time). Normally I would agree to accept them to the apartment as long as they agreed to pay a double security deposit. This allows us to hedge our downside risk in the event that they default. In these cases of policy exception, a default has a 50/50 chance of occurring. She said that the double security deposit was doable and was very excited to move out of her chaotic living environment and move into a “safe” neighborhood. After I learned about these laws, I had to cancel her application. This is how these laws inadvertently affect both low and high income areas, and the people who reside or own property in both.
Furthermore, this new act affects the flow of investment capital across real estate asset classes. Private investment capital will steer away from where it’s desperately needed: in affordable work force housing and instead flow to asset classes like self-storage, office, retail, luxury apartment housing or out of the state entirely.
We’ve been talking about it a long time but it’s time for us to stop talking and to start walking; take action and assemble a Landlord Coalition to represent Western and Upstate NY. These laws are slap in the face and a further indictment against the ease and cost of doing business in NYS. If you are interested in getting involved with the coalition, we are holding an event on the morning of September 10th at Turning Stone Resort. I encourage you to spread the word for us and save upstate housing.

Have you seen my YouTube video call to action? https://youtu.be/gi2wh6JEddg

The event info is here: http://events.r20.constantcontact.com/register/event?oeidk=a07egho7mecbf2285c6&llr=vjljhkqab 

The link to the dashboard on the new laws is here:https://drive.google.com/open?id=1dXJEn1-LuHOAfWdGukrVl41jhMr2kw6z

Please spread the word on the event!

Hi, 

My husband and I are planning to buy our first multi-family within the next few months. With the change in the NYS laws, if you were a new investor, would you still buy a rental property in NYS or look at other states? Or would you look at short term rentals (Airbnb)? 

Thanks for the advice! -- Kathryn 

I would NOT buy rental property  in NYS right now unless you have extremely deep pockets to see you through an eviction that now takes 1yr minimum and cost at least $5k per tenant. If you have that kind of money....good luck 

@Kathryn Baker that’s a loaded question!  I wouldn’t avoid Multifamily, but I would only buy in great locations.  Locations where people WANT to live, not just live there because they NEED a place to live.  There are also other asset classes besides Multifamily: self storage, office, retail, industrial that are lucrative as well!

@Matthew Drouin wish I was able to attend the event. I’m a small time LL right now, but certainly intend on growing. These laws are just for political purposes. There are more tenants than there are LL, which translates to more votes. Feel free to keep me posted on any updates. Good luck with the event!

@Matthew Drouin Thanks for the advice. We are looking to house hack so are only going to buy where we are actually going to live! Thanks for also mentioning other options. We haven't really looked into anything besides multi family with real estate, but it would be interesting to learn more about the other options out there! Thanks!! 

@Cynthia Brooks - where are these evictions you're performing that cost $5k and take a year? I'm in process on 6 evictions right now in the Capital District(Albany and environs,) I expect in total to be out of pocket $3500 on all of them. Make that 5 evictions, one tenant saw the writing on the wall and gave us the keys. I expect one or two more to do the same. The worst ones should be 60-90 days from first notice.

@Michael Gansberg He's talking about once you have evictions under the new laws, from rent demand notice to warrant the time is much longer, and once in court the judge can grant your tenant a one-year stay based on "hardship" (the non-paying tenant's hardship - your hardship comes afterwards).  Make sure educate yourself on these laws - they are quite punitive to the landlord.  So, loosely, if you take the monthly rent and multiply it by 12, then add in attorney's fees and court costs, you can be at $5000 quite easily.

Since your five evictions technically fall under this new legislation, you might get caught in this net.  I hope none are in the city of Albany.

@Wesley W. - I know that a judge can do that now, and I'm hopeful that sanity prevails(as the landlord also has the ability to claim hardship, it isn't completely one-sided,) but in Cynthia's post, she said:

"I would NOT buy rental property in NYS right now unless you have extremely deep pockets to see you through an eviction that now takes 1yr minimum and cost at least $5k per tenant."

These six evictions I'm referring to are taking place under the new laws and they're in Waterford and Troy. I'll update this thread, but I don't anticipate any of these evictions being nearly so expensive in terms of time and money as Cynthia suggests. We'll see.

Originally posted by @Michael Gansberg :

@Wesley W. - I know that a judge can do that now, and I'm hopeful that sanity prevails(as the landlord also has the ability to claim hardship, it isn't completely one-sided,) but in Cynthia's post, she said:

"I would NOT buy rental property in NYS right now unless you have extremely deep pockets to see you through an eviction that now takes 1yr minimum and cost at least $5k per tenant."

These six evictions I'm referring to are taking place under the new laws and they're in Waterford and Troy. I'll update this thread, but I don't anticipate any of these evictions being nearly so expensive in terms of time and money as Cynthia suggests. We'll see.

You should be okay in both those cities.  

The lack of security deposits is my biggest concern at this point (see my current thread).  The problem I have is the tenants' rights organizations are very active in the Capital Region cities.  Tenants routinely acquire a pro bono attorney to accompany them to L/T court, and these lawyers are intimately familiar with the laws and commonly get evictions thrown out due to tiny procedural issues to buy their tenants more time in free housing.  These advocates are going to use these new laws to do more of the same, at the expense of a landlord's income.

The wildcard is the judge.  We'd all hope that each judge has "sanity prevail" - but I have seen plenty of examples locally where the judge gave all kinds of latitude to the tenant at the expense of the landlord.  I've actually never seen a warrant for eviction in my local court that was granted on the earliest possible day - pay no mind to the fact that the tenant has been living rent-free for weeks by the time they get to court.  If a liberal-leaning judge chooses to give some tenant an extended stay, that directly impacts my household income.  I get a couple of these cases (or 5!) that resolve concurrently, and now I cannot pay my own business expenses.

I have never personally seen (nor heard of) a landlord in my area claiming (nevermind getting) any "hardship." We're routinely expected to soak up the loss as a cost of doing business.  I prefer to run my business where I do not have too many wildly unpredictable expenses, and these laws add more.

 

@Wesley W. - I hear you. Are you mostly in Albany? I'm mostly in Troy- Judge Turner is as landlord friendly as they come, but now his hands will be somewhat tied by the new laws. 

I freaked out a bit when this law was passed- I'd call myself a moderate liberal. I think this will play out as follows:

1: Delinquent tenants will have more time in their apartments without paying, increasing costs to owners.

2: Owners will raise the rent on everybody else to account for the higher cost of doing business.

3: The quality of the housing stock will be worse off, because the small group of free riders will negatively impact everyone more broadly than they once did. 

4: Multifamily housing values will be negatively pressured(in a very modest way) due to the new laws.

But I don't see huge effects. Look at it this way- the cap rates of large multifamily buildings in NYC are not dramatically higher than the theoretical cap rate of an owner-occupied single apartment(were one to rent out that apartment) in a similar neighborhood. That suggests to me that the rent-control laws, which are draconian in NYC, haven't dramatically impacted values. NYC draws people in for obvious reasons- employment, entertainment, etc.

So my instinct is that stiffer tenant-protections will be only a secondary or tertiary factor in value determination. The main factors - employment, quality of life, etc. - will impact supply and demand of housing more directly.

      @Michael Gansberg my rational brain agrees with your assessment of the impact.  It just shows me this legislation is overt pandering, with no real attempt to improve tenants' situation.

      @Matthew Drouin With regards to the security deposit I’ve looked into a few security deposit alternatives that might help with that. Basically they issue a guarantee in lieu of a security deposit for a small monthly fee paid by the tenant. Obligo is one and I know they are doing big business in NYC in particular because of the new laws. I signed up with Rhino which is a similar program but I’m only offering it to tenants who have paid on time for a year. Anyway it’s worth a look I haven’t sent them any tenants as of today but I’m gonna give it a shot.

      Disclaimer: My properties are in NJ but I know they are marketing heavily in NY.

      I'm wondering if it's legal to collect a physical deposit and then also require the above guarantee premium?

      And if they don't pay?  That puts you in the same boat we're trying to avoid, eh?