Took over a vacant building in Weehawken, NJ. Need some advice
We just took over a vacant 3 unit apartment building in Weehawken NJ. The laws in Weehawken, NJ aren't too clear on what we can rent the units out for. The building was delivered vacant to us, so since we're the new owners, are we able to set the rates at market? Any advice on steps would be appreciated.
Any reason you would NOT charge market rates?
If delivered Vacant you are good to rent it for current market rate. A buddy of mine owns a 3 family on Clifton Terrace. Two tenants have moved and prior to listing the apartments up he drastically raised the rent on each unit. The rent control issues arise when attempting to raise rents on existing tenants.
Yes, double check your local ordnances. But, I did think that rent control was for existing tenants... Good luck.
Wasn't sure. Do we have to register the apts. vacant with the Weehawken Rent Control Mafia? 1st time in Weehawken, just want to make sure we do everything right.
Quote from @Mike A.:
We just took over a vacant 3 unit apartment building in Weehawken NJ. The laws in Weehawken, NJ aren't too clear on what we can rent the units out for. The building was delivered vacant to us, so since we're the new owners, are we able to set the rates at market? Any advice on steps would be appreciated.
When a property is vacant, you can rent it for whatever you want. Rent control doesn't apply to a vacant rental.
Study the market to see what comparable rentals are going for and rent at market rate. If rent control does apply to your property, be sure to learn the laws NOW and set your leases to allow for the maximum rent increases allowed by law so you don't fall too far behind the market.
Hi @Mike A.--if you want real peace of mind, you can quickly call the town and ask them if they have any rent control ordinances and if so, what the applicable rules/regulations are. However, as others have mentioned, you have the benefit of taking over the building vacant, so you are more than likely in the clear to raise rents up to market since you're placing new tenants in there.
Believe Weehawken has vacancy decontrol - but double check to be sure.
Quote from @Mike A.:
We just took over a vacant 3 unit apartment building in Weehawken NJ. The laws in Weehawken, NJ aren't too clear on what we can rent the units out for. The building was delivered vacant to us, so since we're the new owners, are we able to set the rates at market? Any advice on steps would be appreciated.
Hi @Mike A. I do not believe the unit being delivered vacant changes much. You will have to start with previous registered rents for the 3Fam; however, you should be eligible for some type of increase on those registered rents. Non owner-occupied units and 3+ Family homes are subject to rent control in Weehawken w/ typical rent ordinance allowances from CPI index, water & property tax surcharges, capital improvement increases, etc. Hoboken allows 25% rent increases if the tenant moves out after 3+ year lease term, I believe Weehawken is the same. Make sure you request a legal rent calculation w. the rent board to see allowable increases/what new rents you can charge. Also, make sure you register your rents yearly; especially if using an LLC, the municipal will catch you.
Worth noting, if this is your primary residence you can reset rents to market value after two years of occupancy. This is huge and the ultimate value-add, especially in a market like Weehawken and Hoboken, which also allows you to decontrol rents. If you are not moving in, I’d highly consider it; even more so if the legal registered rents you find out are way below market. I have a client under contract who’s house-hack purchasing a 3Fam w/ bonus unit in Weehawken and doing this right now. This is an easy value-add, opportunity and great way to get rents up and in turn your property value up, with essentially little to no work. Hope this helps!
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Quote from @Steve Schulman:
Quote from @Mike A.:
We just took over a vacant 3 unit apartment building in Weehawken NJ. The laws in Weehawken, NJ aren't too clear on what we can rent the units out for. The building was delivered vacant to us, so since we're the new owners, are we able to set the rates at market? Any advice on steps would be appreciated.
Hi @Mike A. I do not believe the unit being delivered vacant changes much. You will have to start with previous registered rents for the 3Fam; however, you should be eligible for some type of increase on those registered rents. Non owner-occupied units and 3+ Family homes are subject to rent control in Weehawken w/ typical rent ordinance allowances from CPI index, water & property tax surcharges, capital improvement increases, etc. Hoboken allows 25% rent increases if the tenant moves out after 3+ year lease term, I believe Weehawken is the same. Make sure you request a legal rent calculation w. the rent board to see allowable increases/what new rents you can charge. Also, make sure you register your rents yearly; especially if using an LLC, the municipal will catch you.
Worth noting, if this is your primary residence you can reset rents to market value after two years of occupancy. This is huge and the ultimate value-add, especially in a market like Weehawken and Hoboken, which also allows you to decontrol rents. If you are not moving in, I’d highly consider it; even more so if the legal registered rents you find out are way below market. I have a client under contract who’s house-hack purchasing a 3Fam w/ bonus unit in Weehawken and doing this right now. This is an easy value-add, opportunity and great way to get rents up and in turn your property value up, with essentially little to no work. Hope this helps!
Hi Steven, Thank you for chiming in. I'm actually moving into the bonus unit of this building for the foreseeable future. It's a legal three family with a bonus basement which has two rooms, kitchen, bathroom and two egresses. One unit has been empty for close to a year, the other two left a few months ago. The previous owners have not registered the rent units with the city. I recall asking that question prior to submitting the offer. Would you know how I could go about having the basement unit converted into a legal unit? The building is completely vacant right now and has been for about four months. We're going to be renovating each unit and the previous owner and agent said we can renovate and receive market rate rents.
Quote from @Steve Schulman:
Quote from @Mike A.:
We just took over a vacant 3 unit apartment building in Weehawken NJ. The laws in Weehawken, NJ aren't too clear on what we can rent the units out for. The building was delivered vacant to us, so since we're the new owners, are we able to set the rates at market? Any advice on steps would be appreciated.
Hi @Mike A. I do not believe the unit being delivered vacant changes much. You will have to start with previous registered rents for the 3Fam; however, you should be eligible for some type of increase on those registered rents. Non owner-occupied units and 3+ Family homes are subject to rent control in Weehawken w/ typical rent ordinance allowances from CPI index, water & property tax surcharges, capital improvement increases, etc. Hoboken allows 25% rent increases if the tenant moves out after 3+ year lease term, I believe Weehawken is the same. Make sure you request a legal rent calculation w. the rent board to see allowable increases/what new rents you can charge. Also, make sure you register your rents yearly; especially if using an LLC, the municipal will catch you.
Worth noting, if this is your primary residence you can reset rents to market value after two years of occupancy. This is huge and the ultimate value-add, especially in a market like Weehawken and Hoboken, which also allows you to decontrol rents. If you are not moving in, I’d highly consider it; even more so if the legal registered rents you find out are way below market. I have a client under contract who’s house-hack purchasing a 3Fam w/ bonus unit in Weehawken and doing this right now. This is an easy value-add, opportunity and great way to get rents up and in turn your property value up, with essentially little to no work. Hope this helps!
Are you sure doing primary residence on a 2/3 unit property in Weehawken resets the rent to market value? I thought once you move out, the rent goes back to the previously rent-controlled level.