The building stock in New York City is already old and undesirable compared to newer cities. With new rent regulations expected to pass by Saturday, the government will effectively create an environment of deteriorating housing stock. The new regulations severely limit the incentives of landlords to re-invest into their rent regulated housing by not allowing them to re-capture most of this investment through future rental increases. Further, if a regulated tenant made more than $200K per year a landlord could de-regulate a unit, not anymore, which I am not sure how this even protects the middle class. Finally, the gentrification of NYC's neighborhoods was caused by massive private investment into the places like Williamsburg, Long Island City, The East Village and Bed Stuy. With no incentive to re-invest into their real estate, I see this trend of safer, revitalized neighborhood transformations coming to a screeching halt.
DXE Properties has made a commitment to invest in the South East where incredible amounts of investment, population and jobs are migrating.
We have a bunch of NY friends, owners, investors that have been preparing for this to pass and they are not happy.
What is your take?
I feel you @Josh Eitingon !
That's why we focus our investing on more landlord friendly states out here in the midwest!
@Josh Eitingon I agree with you Josh, it's a disaster! As Jay Martin, executive director of the landlord group Community Housing Improvement Program, said the proposals would "devastate New York City's housing stock and all but wipe out small, local property owners.”
I haven't read the exact Bill that just passed, but from what I understand of it is that it strengthens already existing rent-regulated apts in NY.
That's actually EXCELLENT NEWS for those of us who are Investors that own NYC Properties that are NOT REGULATED.
Excerpt from NYTimes Article called "Rent Regulations in New York: How They’ll Affect Tenants and Landlords"
Are the rules just for regulated apartments?
The package of protections extends well beyond those living in rent-regulated apartments to all New Yorkers renting apartments:
Security deposits will be limited to one month’s rent and procedures will be improved to make it easier for renters to get their security deposits back.
Tenants who were seen as troublemakers by landlords — perhaps for standing up for their rights — would sometimes end up on blacklists that would be shared among rental agencies. That practice would be banned.
Tenants would be better protected during the eviction process, particularly against retaliatory evictions.
Unlawful evictions, such as when a landlord illegally locks out or uses force to evict a tenant, would become a crime, a misdemeanor punishable by a civil penalty of between $1,000 and $10,000 per violation.
Landlords would be required to provide at least 30 days notice to tenants if they intend to increase the rent by more than 5 percent or are not going to renew the lease.
The way I see it is that if you buy the buildings that I buy, which are under 6 Units (I only buy 2 to 4 Unit buildings) that are unregulated, you will be in EXCELLENT shape!
Since the regulated buildings may wind up in disrepair in general, it will cause more people to reconsider renting regulated apts and consider paying higher for well kept market rate apts.
This will just increase demand for market rate apts.
This is an easy lesson for any Investor in NYC properties to take into consideration.
However, if the price of these rent regulated buildings should fall dramatically to correct for the lack of future income growth, it may be attractive as an investment after the price adjustment.
Basically, if you were buying buildings that were rent-regulated and you overpaid because you did not considered the future of rent-regulations, it's time to understand that you have to take future politics into account if you were to do it again. If not, just make sure you don't buy buildings that cannot be regulated. There are MILLIONs of unregulated properties. There is PLENTY of choices, really.
As a whole, I do see that neighborhoods with LOTs of rent-regulated buildings will have a negative impact such as higher crime and lower desirability. BUT, the neighborhoods with less rent-regulated buildings will continue to Gentrify and will probably accelerate in rents and prices.
That's just my opinion as a Brooklyn, NYC Investor for the last 21 years.
@Llewelyn A. , I tend to agree. In the short term, I would not be surprised if you to see a boost in value on your 2-4 unit non-rent regulated deals. Longer term it remains to be seen. Either way, in my opinion introducing more free market vs. less in this space would have provided a better net benefit to both tenants and landords.